‘Franchise’ means the special right given by the producer of a product (brand ) to another firm to sell his product in a particular locality. Thus, a ‘franchising’ operation is a contractual relationship between a franchiser (the company offering the franchise) and the franchisee (the company undertaking to promote the sale of franchiser’s products).

Under the franchising system, a manufacturer grants the exclusive right to sell his products or services to a selected retailer in a specified area. The retailers are required to promote and sell the product in specific manner. There is written agreement between the franchiser (supplier) and the independent franchisee (retailer) which lays down the terms and conditions of sale by the franchisee. A franchiser can have arrangement with more than one franchisee to push up his sales.

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