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What is franchising?Franchisor
The brand owner who owns the system, licenses the brand and know-how to partners, and is responsible for training, support and upholding standards.
Where this sits
Franchising is a business model in which a brand owner licenses its brand, operating system and know-how to an independent partner in exchange for fees and royalties. The brand scales through the partner's capital and effort while keeping standards consistent.
In practice
This section summarises United States federal regulation (16 CFR Part 436) as published by the Federal Trade Commission. Rules change and differ by country — check the source before acting. For reference only; not legal advice.
In United States federal law the word is broader than most people assume. 16 CFR 436.1(k) defines a franchisor as "any person who grants a franchise and participates in the franchise relationship" — and adds that, unless stated otherwise, the term includes subfranchisors.
That second clause has a practical consequence people miss: a master franchisee who recruits and supports local partners is functioning as a franchisor for those partners, and carries the same disclosure duties toward them. Taking a country licence is not only buying rights; it is taking on obligations.
Source: 16 CFR § 436.1(k) — Definitions (US Federal Trade Commission Franchise Rule) · Reviewed: 2026-09-02