What Is a Franchise Model?

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A franchise model provides information on the steps and methods for how a business engages and how it works with customers. Discover how franchise models must be followed in agreement with franchise holders with help from a management teacher in this free video on business management and franchises.

Part of the Video Series: Business Management
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Video Transcript

Hi, my name is Mark, and we're going to look at what's meant by a franchise model. Well, franchise is a business arrangement -- agreement -- between an existing successful business organization with a known name brand and you, as a potential entrepreneur, who wants to use their method...system and incorporate it in your...as your own business. For this, you have to pay a fee, and also, you have to run your business and...by the guidelines of the franchise holder. It's a very strict agreement because obviously, there's a method -- a successful method -- of doing things. And you, as an entrepreneur, who wants to buy into this, has to agree fundamentally with their system and their operation. This is what's really known as a model, and that is how to do something from A to Z -- what the steps are, the methods are, how you engage the business and how you engage with the customer, how you interact what services you offer, how you offer it. It's the philosophy as the franchise holder you're buying into. And as a...obviously, it's a very well-known and established organization and it's successful. That is the reason why you're buying into it. So these are the steps that you must take and follow in agreement with the franchise holder, and that is what is known as the franchise model. So all the best.

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