Franchising - what exactly is it? Characteristics of the business model
For business
17 July 2025
In the opinion of many, franchising is one of the best business models ever devised. The modern franchise model has proven time and time again that it will be successful if it is run conscientiously, in accordance with all of the parent company's objectives. What's more, it often doesn't take much to become a franchisee: neither knowledge nor monetary input and, most importantly, you can reap almost immediate benefits from your chosen business. Find out what a franchise, a franchisee and a franchisor are and whether this business model pays off.
Franchising - what is it about?
Franchising is a type of business partnership that involves one party (known as the franchisor) granting the other party (known as the franchisee) permission to use its name and brand strategy, in a given territory, for a contractually agreed period. The partner thus benefits from the established parent company and all the know-how, but is expected to adhere to quality standards, the corporate management of the brand, as well as to share profits. There are several types of franchises: the franchise model is used, among others, in industries such as food, retail, transport, home decorating, personal training and many others. 
Although it might seem that franchising is a new creation, nothing could be further from the truth. Indeed, the word franchise has its roots as far back as the beginning of the second millennium. As early as the Middle Ages, kings granted paid licences, e.g. for the use of forests or trade in a certain area. In Great Britain during the industrial age (19th century), craftsmen, after training, were granted licences by their guild representatives and were thus allowed to carry out a particular activity. However, the real cradle of franchising in the modern sense is considered to be the United States, where this business model achieved real momentum in the 1960s; the dynamics of its development reached such a dizzying pace that expansion into Europe soon began. The first Polish franchisor was the Mr Hamburger chain (1991). In 2006, the number of franchise brands in Poland exceeded 300, and in 2014, there were already 1,000. Currently, there are more than 1,300 franchise chains in Poland. Each brand guarantees franchisees a different type of support, has different requirements and a different expected amount of investment. The real icons of franchising are the well-known McDonalds fast-food bars which are at the same time real giants of the market, however, each of us is probably able to name many other well-known brands without much effort, e.g. Żabka franchise shop or PSB Mrówka. InPost, too, has a proposal in its sector - the Parcel Service Point on a franchise basis.
What does a franchise business model look like?
The franchisee is granted a franchise licence to use the products, trademarks, software and other tools of the parent company in accordance with the guidelines of the franchise agreement. Little, the franchisor provides the franchisee with training, methodology and support at each stage of development. Choosing franchising as a business model allows entrepreneurs to grow their business without having to spend large sums of money to open a business, including building and equipping new units.
The franchisee - depending on the business it decides on - does not even need to employ staff. This is because a large proportion of businesses are one-man franchises - all you need to run them is a car, a computer and a telephone. There is then no need to rent premises, as the franchise can be run from home to avoid unnecessary fees. When the franchisor becomes successful in its previously one-person business, it will be encouraged to turn it into a larger company and hire employees. On the part of the franchisee, he can then count on assistance in finding a suitable outlet, training in people management, advertising and, ultimately, a gradual increase in joint profit.
The risk of setting up and running a new business is therefore transferred to the start-up capital provider. In turn, the franchisee, by adopting a proven business model, undertakes to pay the franchisor a fixed proportion of its turnover for this.
Who is the franchisee and who is the franchisor?
A franchisee is defined as an entrepreneur who opens a business under someone else's banner. Such an entrepreneur operates under licence from the parent company (franchisor), using its logo, its products, know-how and support in many areas, for example logistics or accounting. Franchisors, on the other hand, are companies that license their business and all their know-how in exchange for sharing part of the revenue. Both are bound by a franchise agreement, which sets out the rules for running the business, fees and commissions, etc. 
Advantages and disadvantages of franchising
Franchising, like any business, has its advantages, but it is also not without its disadvantages. The undeniable strengths of franchises include:
- Low own contribution - clients often choose to franchise due to a lack of financial background to create their own brand;
- the opportunity to operate under a well-known brand, with an established market position; customers tend to place more trust in businesses that operate under the banner of a well-known company;
- less risk of business failure and collapse in the first moments of operation;
- profit is guaranteed almost immediately;
- support in the development process (training) and in marketing activities (organisation of promotional campaigns);
- Assistance with bookkeeping, paperwork and other elements of business operation - this is an excellent option for new entrepreneurs who have very little business experience; entering into a franchise agreement and following the franchisor's guidance can help alleviate the uncertainties of starting a business from scratch;
- franchisor and franchisee work together for success and face challenges together - in the light of unpredictable events, such as a pandemic, franchisees are not left alone with the problem.
In contrast, the key disadvantages of franchising are as follows:
- limited autonomy. The entrepreneur only provides the services and offered by the franchisor;
- some types of franchise do not require any own contribution; the vast majority of franchisors, however, require clients to pay an initial franchise fee (licence fee) and ongoing royalties. Sometimes the fees are dependent on turnover with the proviso that they cannot be less than the sum specified in the contract, which may mean little profit for franchisees at the outset;
- The success that is highly likely to be achieved will never be the success of the franchisee, but of the brand that licensed it;
- if there is an internal brand image crisis, the franchisee will also feel it (even if their business is growing as planned).
In summary, the franchise model is a ready-made business recipe - whether it will be successful depends entirely on your commitment and ability to adapt to the imposed guidelines. Observing the thriving franchise market in Poland, it can be expected that the offer of this type of business will become even richer and more accessible to franchisees. In turn, franchisors will have even better tools to support their partners, making it even safer to run your own business under a franchise licence. Whether you're looking for an idea for your first business, you're in a day job and looking for an escape from an unsatisfying job, or you're already a business owner - franchising could be a great option for you. Especially if you have ready-made products and full know-how at your disposal.
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