Franchise

A purely contractual relationship under which the franchisor gives the franchisee the right to operate its “system” in return for a set of fees. The parties typically provide in their agreement that their relationship does not constitute a partnership or joint venture. The basic terms of the relationship consist of a licence from the franchisor giving the franchisee the right to use its trade-marks and promises to provide certain assistance in running the franchised business, including training. In return, the franchisee agrees to operate the franchised business in accordance with the standards of the franchisor and to pay certain fees based, in part, on the sales of the business.