Franchisor vs Franchisee: What’s the Difference in the UK?

The franchisor is the business that owns the brand and the business model. The franchisee is the person who buys the right to run their own business using that brand and model. The franchisee pays the franchisor fees, and in return gets a proven system, training and ongoing support.

Here’s what each side does, how the money works, and what to check before you become a franchisee.

Key takeaways

• The franchisor owns the brand and system. The franchisee owns and runs their own business within it.
• Franchisees usually pay an upfront fee and ongoing fees.
• The franchise agreement sets out both sides’ rights and responsibilities.
• Talk to existing franchisees before you sign. They’ll tell you how the model really works.

What is a franchisor?

A franchisor is the company that created the business model and brand, and licenses other people to use them. The franchisor’s role is to:

• Protect and build the brand
• Provide the systems, processes and technology franchisees use
• Train new franchisees
• Give ongoing support, such as marketing, guidance and updates
• Make sure every franchisee meets the brand’s standards

What is a franchisee?

A franchisee is a business owner who buys the right to run a business under the franchisor’s brand. The franchisee’s role is to:

• Run their business day to day
• Follow the franchisor’s systems and standards
• Find customers in their area
• Pay the agreed fees
• Manage their own costs, staff and growth

The franchisee owns their business, but within the rules of the franchise agreement.

Franchisor vs franchisee at a glance

How the money works

• Upfront fee: paid when you join, usually covering training, set-up and the right to use the brand.
• Ongoing fees: often a monthly fee or a percentage of turnover, sometimes called a royalty or management service fee.
• Marketing contribution: some franchises charge a separate fee for national marketing.

Always ask exactly what each fee covers, and what other costs you’ll need to run the business.

The franchise agreement

The franchise agreement is the legal contract between franchisor and franchisee. It usually covers:

• How long the franchise lasts and how it renews
• Your territory, if you have one
• Fees and how they’re paid
• The support the franchisor provides
• The standards you must meet
• What happens if you want to sell or leave

Have a solicitor who specialises in franchising review it before you sign.

Questions to ask before becoming a franchisee

1. What training and support do I get, and for how long?
2. Can I speak to existing franchisees?
3. What are all the fees, upfront and ongoing?
4. How long does it typically take franchisees to start earning?
5. Is the franchisor a member of the British Franchise Association?

Our guide to cheap franchises in the UK covers more warning signs to look out for.

Frequently asked questions

What is the difference between a franchisor and a franchisee?

The franchisor owns the brand and business model. The franchisee pays to run their own business using them.

Does a franchisee own their business?

Yes. The franchisee owns their business, but runs it under the franchisor’s brand and within the franchise agreement.

Who pays who in a franchise?

The franchisee pays the franchisor, usually an upfront fee and ongoing fees, in return for the brand, systems and support.

Can a franchisee sell their business?

Usually, yes, with the franchisor’s approval. The franchise agreement sets out how.

Thinking of becoming a property franchisee?

Sourced is the franchisor behind a network of property businesses across the UK. Sourced Property Partners get the brand, training, technology and investor network to build their own property business.

Explore the Sourced property franchise