Banking Term: Franchising

Find important banking term that is useful in upcoming banking exam.

Mar 4, 2015 12:40 IST

It is a contractual arrangement under which an independent franchising produces or sells a product or service under the brand name of the franchisor and to his specification and with marketing and other support. The franchisee pays a royalty to the franchisor and may purchase supplies from him.

The franchisee provides his own capital and is legally an independent enterprise, which is nonetheless highly dependent upon the franchisor, through many small businesses, may enjoy no greater degree of independence than many franchised enterprises.

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