A franchise is _____.

A franchise is fundamentally a business model where individual business owners, known as franchisees, purchase the rights to operate a business using the branding, operational systems, and support of a larger company, referred to as the franchisor. This arrangement allows franchisees to leverage the established reputation and marketing power of the franchisor, enabling them to operate under a recognized brand and benefit from system-wide resources, which significantly increases their chances of success compared to starting a new business from scratch.

The franchise arrangement typically requires the franchisee to pay an initial franchise fee along with ongoing royalties based on their sales. This structure is based on a contractual agreement that defines the operational guidelines and support provided by the franchisor, which can include training, marketing, and operational manuals. The training and established business practices often lead to lower risk and higher chances of profitability for franchisees compared to independent startups.

In contrast, the other options do not accurately represent the nature of a franchise. While it can be costly to get into a franchise system due to fees, characterizing franchises as illegal or overly expensive to maintain does not reflect the general understanding of reputable franchise organizations and their frameworks that facilitate business success. Thus, the notion that a franchise is a license purchased from a larger company captures the