Chapter 15. Franchising · What is Franchising and How Does It Work? A. What is Franchising Franchising is a form of business organization in which a firm that already has a successful product or service licenses its trademark and method of doing business to other businesses in exchange for and initial franchise fee and an ongoing royalty. B. How does franchising work? It is a form of growth that allows a business to get its products or services to market through the efforts of business partners or “franchisees”. There are 3 franchise agreement ; Individual franchise agreement, area franchise agreement, master franchise agreement. · Establishing a franchise system A. When to Franchise Retail firms grow when two things happen: first, when the attractiveness of a firm’s products or ...