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Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc - meaning free, and is used both as a noun and as a (transitive) verb.

For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid the need for investments and liability for a chain.

The franchisor's success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.