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 that avoids the investments and liability of 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.

Thirty three countries, including the United States, China, and Australia, have laws that explicitly regulate franchising, with the majority of all other countries having laws which have a direct or indirect impact on franchising.

Businesses for which franchising work best have one or several of the following characteristics^{[citation needed]}:

As practiced in retailing, franchising offers franchisees the advantage of starting up business quickly based on a proven trademark, and immediate access to the tooling and infrastructure, as opposed to having to develop them.