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Franchising works by having a company <a href="https://1851franchise.com/tips-for-preparing-your-franchise-system-for-sale-2704626">sell its concept</a> to other entrepreneurs who agree to follow the business model in exchange for <a href="https://1851franchise.com/nick-powills-royalties-are-greater-than-fees-2709235">paying fees and royalties to the franchisor</a>. It is a mutually beneficial strategy — entrepreneurs choose to franchise businesses to raise capital and grow market share, while prospective franchisees choose to invest in a franchise because it provides a path to business ownership that’s significantly de-risked.A company becomes a franchise by filing a <a href="https://1851franchise.com/what-is-an-fdd-2705192">Franchise Disclosure Document</a> and licensing its branding and operational model to other entrepreneurs, who open, own and manage their own locations with the brand.&nbsp;<a href="https://www.mcdonalds.com/us/en-us/about-us/franchising/franchising-faq.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-does-franchising-work-2716469#:~:text=How%20much%20is%20a%20McDonald's,be%20paid%20to%20the%20franchisor." target="_blank" rel="nofollow">McDonald’s</a>, for example, is <a href="https://www.investopedia.com/articles/markets/032015/how-mcdonalds-makes-its-money-mcd.asp?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-does-franchising-work-2716469" target="_blank" rel="nofollow">93% franchisee-run</a> and is one of the world’s largest franchised brands. That means most McDonald’s are owned not by the McDonald’s corporation, but by entrepreneurs — or franchisees — who handle the day-to-day operation of their stores while the larger corporation — or franchisor — provides operational guidance, marketing support, vendor contracts and other resources. McDonald’s has established a brand name, reputation and processes of service that make it <a href="https://1851franchise.com/why-is-mcdonalds-considered-a-real-estate-company-2715077">profitable to own</a> and easier to launch than starting a business from scratch.&nbsp;Chipotle, on the other hand, is a chain restaurant, meaning every single Chipotle location is owned by the Chipotle Mexican Grill corporation, not individual franchisees. Unlike chains, franchised brands have greater flexibility in how they staff their stores and engage with their communities. Usually, a franchised business is owned by a local entrepreneur with ties to their geographic location.If you are interested in franchising with a company in 2021, check out 1851 Franchise’s list of <a href="https://1851franchise.com/what-are-the-best-franchises-to-own-this-year-2715333">the top franchise brands right now</a>.

How Does Franchising Work?

1851 Franchise

Franchising is a process in which an entrepreneur partners with a corporate brand to open a business. The franchisee owns and operates that location using the franchisor's brand name, logo, products, services and other assets.

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HomeTeam Inspection Service

Good Day Columbus: Home Insurance Expert Reveals Why Central Ohio Premiums Are Rising and How to Combat Costs

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CapitalSpring

Primetime Fitness Expands Crunch Portfolio With CapitalSpring’s Backing

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Children's Lighthouse

How Children’s Lighthouse Franchisees Scale to Multiple Locations

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Express Employment Professionals

Betting on Himself: How Chris Brown Built an Express Employment Professionals Franchise From the Ground Up

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Comfort Keepers

Comfort Keepers® Named One of America’s Best Home-Care Providers

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Potbelly to be Acquired by RaceTrac in $566 Million Deal 

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Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities - 1851 Franchise Agg

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities 

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Caribou Coffee Names Scott Kennedy CEO, Eyes Continued Growth

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McDonald’s Launches New Extra Value Meals as Consumer Demand for Value Continues to Climb

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Technomic Releases Annual Ranking of the Top 15 Fast-Food Chains in the U.S.

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Small Business Optimism Dips, Raising Concerns for Franchise Owners

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DevHub - Meet the Supplier - 1851 Franchise

DevHub: Scalable Digital Marketing for Franchises and Multi-Location Brands

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1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

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Sparkle Squad Franchise Costs, Fees, Profit and Data for 2025

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How Does Franchising Work?

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