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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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Dillas Quesadillas

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Why Dillas Quesadillas Is the QSR+ Brand Fans Didn’t Know They Were Waiting For

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How Dillas Quesadillas is Becoming the Top Franchise Choice by Trailblazing its Own New Segment: Quesadilla-Focused QSRs

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Why Dillas Quesadillas Is Built To Scale — and Built for Operators Who Want To Do It Right

The Cleaning Authority

“People First” and a Playbook: The Cleaning Authority’s Katie Dills on What Actually Helps Franchisees Win

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Beansquad

Navigating Sales Tax Compliance for Franchises: Insights from BeanSquad

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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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Power Eats: Smoothie King Rolls Out Food Nationwide To Fuel Franchise Growth

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Keurig Dr Pepper Splits in $18 Billion JDE Peet’s Deal, Creating Global Coffee Giant

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McDonald’s Rolls Out Major Value Push To Win Back Customers Amid Inflation

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

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graphic image of a franchisee spotligh aman kaur of voodoo brewing

How This Trio of Friends Is Brewing Up Community With Voodoo Brewing Co. in Prosper, Texas

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Franchise Deep Dive graphic with i9 Sports logo

i9 Sports Franchise Costs, Fees, Profit and Data for 2025

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Multi-Unit Wendy’s Operator Signs 12-Unit Deal With Layne’s Chicken Fingers

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How Vishal Juneja Turned a Family Tradition Into a Paris Baguette Franchise

How Vishal Juneja Turned a Family Tradition Into a Paris Baguette Franchise Built on Heart and Community

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How Does Franchising Work?

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