A special form of licensing is franchising, which allows the franchisee to sell highly publicized product or service, using the parents brand name or trademark, carefully developed procedures, and marketing strategies. In exchange, the franchisee pays a fee to the parent company, typically based on the volume of sales of the franchisor in its defined market area. The franchise is operated by the local investor who must adhere to the strict policies of the parent.
Franchising is the contractual business arrangement between a manufacturer or other supplier, and a dealer such as a restaurant operator or retailer.