A restaurant franchise is a contractual agreement, and most importantly, a relationship, between a restaurant's corporate owner (franchisor) and the restaurant's current operator (franchisee). Based on this relationship, the brand's owner licenses out a restaurant to be owned and operated by the franchisee that pays for use of the intellectual property owned by the brand, the trademark, and marketing plan. This codependency allows a franchisee to be able to open a restaurant with an already existing business model, operating procedures, and support and management training, while the corporate proprietors succeed by instituting fees to license and expand the brand.
One of the most significant reasons individuals become restaurant franchise owners is because they get to benefit from instant brand recognition and gain the trust of consumers that generally takes many years to build. This familiarity and reputation allows an owner to instantly take over a franchise, without needing to start from scratch to gain a customer base.
A franchise often begins as a successful mom-and-pop restaurant before branching out to multiple locations and investors. The original restaurant is able to refine the concept, see what works and create a proven formula before the brand is able to take on franchisees. As more locations are opened, the brand is able to grow quickly and the franchisor makes more money. At the same time, franchisees are able to take advantage of the franchise formula and take on less risk.