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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?

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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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Seniors Helping Seniors®

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Seniors Helping Seniors® In-Home Care Services Expands to St. George, UT

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Mosquito Hunters

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Scaling the Rockies: Brad Goins’ Remote Success With Pest Hunters-Mosquito Hunters-Humbug Holiday Lighting in Colorado

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TWO MEN AND A TRUCK

TWO MEN AND A TRUCK® and TWO MEN AND A JUNK TRUCK® Celebrate Franchise Success at Annual Conference

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USA Ninja Challenge

How Dale Grant Used Three Decades of Gymnastics Expertise to Build USA Ninja Challenge

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Preservan

Preservan Celebrates First-Ever BrightPath Gathering: Lighting the Way for Community and Sustainability

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Yum! Brands CEO David Gibbs To Retire in 2026 After 36 Years With the Company

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Hooters Bankruptcy - Chapter 11 - April 2025 - 1851 Franchise

Hooters Files for Bankruptcy, Sells Restaurants to Franchisee Group

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Fly Dance Fitness Expands With First Franchise Location in Georgia

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&pizza - Fast-Casual Pizza Chain Begins Franchising - 1851 Franchise

&pizza Embraces Franchising To Fuel Bold New Growth Strategy

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CFOs See Recession as Likely in ’25; Why Now Is the Time To Water the Franchise Buyer Seeds

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Paris Baguette Ranks Among Top Franchises on Entrepreneur’s Franchise 500® for 2025 - 1851 Franchise

Paris Baguette Ranks Among Top Franchises on Entrepreneur’s Franchise 500® for 2025

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1851 Agg - McDonald's Sales Decline Expansion Continues - 1851 Franchise

McDonald’s Franchisees Feel the Pressure as Sales Decline and Expansion Continues

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RestaurantNews: Franchisees File Comprehensive Legal Complaint Against Hurricane AMT

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Franchise Deep Dive: Studio Pilates Franchise Costs, Fees, Profit and Data

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Florida Franchisee Reflects on Success and Growth with Sylvan Learning

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The Top Quick Service Restaurant Franchises for 2025

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Top 25 Emerging Restaurant Franchises - 1851 Franchise

Top 25 Emerging Restaurant Concepts to Consider in 2025

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Military Veteran and Craft Beer Enthusiast to Bring Voodoo Brewing Co. to Toledo, Ohio

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How Does Franchising Work?

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