Franchisor vs Franchisee: What’s the Real Difference (And Why It Matters)

If you’ve ever dreamt of owning a business, chances are you’ve come across the word “franchise.” But then comes the confusion — who’s the franchisor and who’s the franchisee? Are they business partners? Is one the boss of the other?

Let’s clear the fog.

Imagine a cricket match. The franchisor is like the coach who has created the winning strategy. The franchisee is the player who follows that strategy on the field. Both need each other — but they have very different roles.

Who is a Franchisor?

The franchisor is the original business owner or company that has built a successful brand, product, and business system. Instead of expanding everywhere on their own, they allow others to replicate their model through franchising.

Think McDonald’s, Subway, KFC, Naturals Ice Cream, or Chai Sutta Bar.These brands started somewhere small and grew big by letting others run their outlets using their name and system.

What the franchisor provides:

• The brand name and logo

• A proven business model

• Operational training and manuals

• Marketing support

• Supply chain and vendor connections

• Ongoing guidance

Their goal? To scale the brand without investing their own money in every outlet.

Who is a Franchisee?

The franchisee is the entrepreneur who buys the rights to run the franchisor’s business in a particular location. They invest their own money and manage the day-to-day operations of that outlet.

Think of a local Domino’s outlet in your area — it’s probably owned by a franchisee, not Domino’s HQ.

What the franchisee does:

• Pays a one-time franchise fee

• Invests in setting up the outlet

• Runs daily operations

• Follows the brand’s rules and guidelines

• Pays ongoing royalty (usually a % of revenue or profit)

The franchisee enjoys the power of an established brand while still being their own boss.

Key Differences at a Glance:

Role	Franchisor	Franchisee
Business Model	Creator of the system	Follower of the system
Investment	Low (uses others’ capital to expand)	High (invests own capital to set up)
Control	Sets rules, branding, and SOPs	Operates the outlet, but within the rules
Revenue	Earns via fees and royalties	Earns from daily sales and profits
Focus	Brand growth and standardisation	Local execution and profitability

Why It’s Important to Know the Difference

If you're exploring franchising, you need to know which side of the table you’re sitting on.

• Want to build your own brand and expand across India? You’ll be a franchisor.

• Want to start a business using someone else’s brand? You’ll be a franchisee.

Understanding these roles will help you make smarter decisions, negotiate better, and align your expectations with reality.

Final Thoughts

Franchising is a two-way relationship. The franchisor builds the system. The franchisee brings it to life. One without the other doesn’t work.

Whether you want to own a franchise or create one, your success will depend on understanding this dynamic deeply.

Stay tuned — in upcoming posts, we’ll dive into how to choose the right franchise and what questions to ask before signing any deal.

Thinking of buying a franchise? Or want to turn your business into one?Follow our channel and let’s decode franchising together — one step at a time !