The term "franchise" or "franchising" is used to describe a wide variety of business relationships. For example, a vending machine operator may receive a franchise for a particular kind of vending machine, including a trademark and a royalty, but no method of doing business. The parties involved typically enter a franchise agreement, which binds the parties together through contractual provisions. This is an arrangement whereby someone with a good idea for a business (the franchisor), sells the rights to use the businesses name and sell a product or service to someone else (the franchisee). A franchise agreement will usually specify the given territory the franchisee can use as well as the extent to which the franchisee will be supported by the franchisor (e.g. training and marketing campaigns). Most franchisee agreements, however, do not provide the franchisee with exclusive control over the given territory.

There are certain advantages to franchises - as practiced in retailing, franchising offers franchisees the advantage of starting up a new business quickly based on a proven trademark and formula of doing business, as opposed to having to build a new business and brand from scratch (often in the face of aggressive competition from franchise operators). As long as their brand and formula are carefully designed and properly executed, franchisors are able to expand their brand very rapidly across countries and continents, and can reap enormous profits in the process, while the franchisees do all the hard work of dealing with customers face-to-face. Additionally, the franchisor is able to build a captive distribution network, with no or very little financial commitment. For some consumers, having franchises offer a consistent product or service makes life easier. They know what to expect when entering a franchised establishment.

There are also some disadvantages to franchises - For franchisees, the main disadvantage of franchising is a loss of control. While they gain the use of a system, trademarks, assistance, training, and marketing, the franchisee is required to follow the system and get approval of changes with the franchisor. In response to the soaring popularity of franchising, an increasing number of communities are taking steps to limit these chain businesses and reduce displacement of independent businesses through limits on "formula businesses." Another problem is that the franchisor/franchisee relationship can easily give rise to litigation if either side is incompetent (or just not acting in good faith). For example, an incompetent franchisee can easily damage the public's goodwill towards the franchisor's brand by providing inferior goods and services, and an incompetent franchisor can destroy its franchisees by failing to promote the brand properly or by squeezing them too aggressively for profits. This website has been designed to provide our users with access to all of the major lenders offering all types and variations of loan within the UK. Please note we are an advertising medium and do not therefore endorse products or give any financial advice relating to the products and services offered by the advertisers on this site.