In a franchise agreement, a franchisee typically has what kind of relationship with the franchisor?

In a franchise agreement, the relationship between the franchisee and the franchisor is characterized by the franchisee's responsibility to sell the franchisor's products or services within a defined territory. This arrangement allows the franchisee to operate under the established brand and utilize the franchisor's business model, marketing strategies, and support systems.

The defined territory aspect is crucial; it ensures that the franchisee has exclusive rights to operate in a specific geographic area, preventing competition from other franchisees of the same brand in that zone. This exclusivity can enhance the franchisee's potential for success, as they can build a customer base without competing with other franchisees for the same customers.

Additionally, the franchisee usually pays fees or royalties to the franchisor, which is part of the financial arrangement that compensates the franchisor for the right to use their brand and business methods. This structure is a key element that differentiates franchising from other business relationships, such as partnerships or independent business operations.