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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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Fitness Premier

Fitness Premier: A Legacy of Excellence, Built on a Foundation of Fitness

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Busy Bee Jumpers

From Solo Hustle to Franchise Muscle: Why Converting to a Busy Bee Franchise Just Makes Sense

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Paris Baguette

Paris Baguette Franchise - Anusha Jonnala and Swapna Varala - 1851 Franchise

Blending Tech, Hospitality and Health Care: How Three Women From Different Worlds Came Together to Build a Paris Baguette Franchise

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Minuteman Press International

The Brown Family and team at Minuteman Press in Rancho Cucamonga, CA.

Minuteman Press Franchise Review: 30-Year Legacy in Rancho Cucamonga

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Beansquad

BeanSquad Franchise - How BeanSquad Is Taking the Stress Out of Franchise Bookkeeping - 1851

How BeanSquad Is Taking the Stress Out of Franchise Bookkeeping

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Buying a Franchise Masterclass

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Uptick in Jobless Claims Points to Continued Instability in Labor Market

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Extraordinary Brands Acquires CycleBar and Rumble, Shaking Up Boutique Fitness Franchising

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NJCAR v. Ford - New Jersey Supreme Court Limits Standing Under Franchise Practices Act

New Jersey Supreme Court Limits Standing Under Franchise Practices Act

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Planet Fitness Franchisees Donate $100K to Support Texas Flood Relief - 1851 Franchise

Planet Fitness Franchisees Donate $100K To Support Texas Flood Relief

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McDonald’s Is the Latest Franchise To Bet Big on Beverages with 500-Store Premium Drink Test

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Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores - Agg - 1851 Franchise

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores

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Rising Jobless Claims Could Signal Challenges — and Opportunities — for Franchising

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Small Business Optimism Dips, Raising Concerns for Franchise Owners

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Wendy's CEO Kirk Tanner Steps Down - Breaking News - 1851 Franchise

Wendy’s CEO Kirk Tanner Steps Down Amid Challenges, Leaving Franchisees Facing Uncertainty

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Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

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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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Why This Real Estate Broker Decided To Bring Caring Transitions to Central Texas

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911 Restoration Franchise Costs, Fees, Profit and Data for 2025

How Does Franchising Work?

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