Franchising is related to the selling of a license by the owner (franchisor) to a third party (franchisee) permitting them to sell a product or service for a specified period at a specific market. This kind of business is usually divided into two different types of franchisor/franchisee relationships: business format and product distribution.

In business format franchising the franchisee is fully provided with the product, trade names, and operating procedures.

Product distribution or also called trade name franchising is more of a distribution arrangement than a business format franchise.

Many service businesses are operated under franchises including well-known brands such as McDonald’s, Burger King, Subway, KFC, Office 1 Superstore, etc.