![]() The franchisor permits the franchisee to use his/her business name, trademark, services, techniques, methods, etc., for an agreed fee. The relationship between franchisor and franchisee is significant as it forms the base of a franchise business. A franchisee may also open a new branch of the franchisor business after all the legal formalities are complete. A franchisee pays the franchise fee and signs an agreement with the franchisor. In a franchise business, the franchisee uses the trademark and brand name of a franchisor and sells the franchisor’s products or services. Thus, both franchisee and franchisor have a legal and commercial relationship with each other. In simple terms, a franchisee runs a business by using the existing brand name and business model of a franchisor for a specific period. A franchise is a business where an individual or an entity known as the franchisee owns a business under the trademark, brand, and business model owned by another entity known as the franchisor.
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