Franchising

This is an agreement where one party (Franchiser) sells the right to and other party (Franchisee) to market its products or services.

Normally franchiser is famous company and the franchisee can be a sole trader or a partnership or a company.

Both parties in law have separate legal identity, but the contract between them, makes their relationship interdependent.

When franchisee signs the agreement with the franchiser the franchisee should pay initial agreement free to the franchiser

The franchiser provides a franchisee package to the franchisee which normally contains
Recipes or list of raw materials
Methods or procedures
Training and consultancy
Associated suppliers
Prices
Promotional materials etc

The franchisee should pay royalty from his/her sales income, and also sometimes royalty from the profits.