What is a franchise business A franchise business is where a start-up business uses another successful company’s business model. A franchise business model provides a franchisor (the successful company that owns the franchise) with an alternative to setting up a chain of stores in order expand his business operations without making any additional investment or incurring any liability over the business outlets. The franchisee in turn, gets a chance to buy into the success of the franchisor and acquire a new business with recognizable brand presence, loyal customers and whose systems have been proven in the market. A franchisee is able to start a business quickly using a proven trademark, tooling and infrastructure instead of developing his. In U.S. and China there are specific laws that govern operations and administration of franchises. However, in most countries, they are treated just like any other distribution system whose normal trademark laws apply. For a franchise business to work best, it needs to have several important characteristics which include a unique concept that sets the business apart from the other competitors, a broad geographical appeal, proven record of profitability and clearly articulated systems, procedures and processes that are easy to duplicate across all the franchise outlets. The U.S. has the largest number of established franchises (approximately 4%) and it is a broadly recognized as a leader in the franchising business and innovations. These franchise businesses are found in all sectors including restaurants and big hotels, hospitals, trucking stations, gas stations and many more. Some examples of the well known and established franchises are McDonalds, Subway chain of restaurants, 7-Eleven convenience Stores, Hampton Inns & Suites which are mid price hotels and Great Clips which is a hair salon chain. A franchisor demands franchise fees from a prospective franchisee that comes in the form of an initial franchise fee that is paid before getting the authority to commence operations and an annual franchise fee that is calculated on gross annual sales. These payments are made to cover the cost of royalties for the brand trademarks, advertising, training and continued advisory services. A franchise is given for a specific time period which is divided into shorter renewal periods of about 5 years. A franchise also has a specific area or territory from which it operates. A single franchisee may be granted several such territories. Franchise agreements usually last between five and thirty years, but premature termination of a contract may occur to the detriment of a franchisee.