The franchise model is gaining popularity in France. According to the French Franchise Federation (Fédération Française de la Franchise, FFF), in 2025 there were 2,035 franchise networks and 93,395 franchise stores around the country. What is a franchise and how can you join a franchise network? What are the characteristics and pros and cons of the franchise business model? What are each party’s obligations? In this article, we discuss in detail the principles of franchising and explain how to get started with one.

Key takeaways

• A franchise is a collaborative business model that allows independent business owners to take advantage of a proven concept. The franchisor originates the concept and the franchisee acquires the rights to replicate it.
  
• There are three main types of franchises: Industrial, distribution, and services.
  
• A franchise contract is the framework for the parties’ relationship, defining their respective roles and obligations.
  
• Joining a franchise network can be expensive. There are initial fees, periodic royalties, business premises, initial inventory, and operating equipment and supplies.
  
• Franchising offers many advantages to the franchisee, including brand recognition, quick startup times, and ongoing support.
  
• Franchising has some disadvantages as well: Limited autonomy and creativity, and high operating costs.
  
• To open a franchise, you must study the market, draw up a budget and business plan, choose a location, secure personal capital, and sign a franchise agreement.
  

What is a franchise?

A franchise is a system for selling a product, service, or technology in which an independent businessperson, called a franchisee, acquires the right to replicate and operate a concept created by another business owner, the franchisor.

Franchises are based on the idea of a close, continual partnership between two parties to ensure consistent products and services. A franchise allows the franchisee to start a business with a safety net. The franchisee benefits from a proven concept and support from the franchisor. The franchisor is able to expand their brand without investing their own resources. The partnership is formalized in a franchise agreement.

Franchisees remain legally and financially independent while licensing the brand. While united under the brand’s identity, they are neither co-owners nor subsidiaries of the parent company.

In which industries do franchises operate?

Franchises exist in many industries, including food and beverage, restaurant (especially fast food), beauty, retail, crafts, hair salons, hospitality, real estate, car rental, and personal services. It’s a business model that adapts easily to any type of activity.

What are the different types of franchises?

There are three main types of franchises: industrial (or manufacturing), distribution, and services.

Industrial franchises

In industrial franchises, the franchisor grants the franchisee the right to manufacture and market a product using a technique developed by the franchisor. Coca-Cola and PepsiCo are among the world’s most well-known industrial franchises.

Distribution franchises

In distribution franchises, franchisees sell products made or chosen by the franchisor at points of sale that strictly adhere to the brand image and identity. Carrefour, Monoprix, H&M, and Yves Rocher all use this model.

Service franchises

In service franchises, franchisees provide services under the franchisor’s brand using the franchisor’s techniques and knowledge. This model is commonly used in the fast-food industry (e.g., McDonald’s, Burger King, Subway) and hair salons (Franck Provost).

There are also hybrid franchises. For example, Alain Afflelou is both a distribution and service franchise within the optical sector.

How does a franchise work?

A franchise is a structured partnership between a franchisor and franchisee. The franchisor successfully develops and grows an original concept. As the brand owner, the franchisor then licenses its distinctive brand and knowledge to franchisees in order to expand the franchise.

Franchisees license the right to replicate and operate the concept from the franchisor through a franchise agreement. The agreement lays out each party’s obligations and forms a contractual relationship.

Once the contract has been signed, the franchisor shares with the franchisee its proprietary methods and commercial, technical, and logistical knowledge (which are not readily accessible to those outside the franchise network). This information exchange might take the form of an operations manual outlining the factors behind the franchisor’s success or an initial training program.

Franchisees must respect this proprietary information throughout the agreement’s duration. Subject to a confidentiality obligation, franchisees agree not to disclose the franchisor’s trade secrets and techniques. In exchange for this proprietary information, franchisees pay an initial fee and periodic royalties, while the franchisor offers ongoing technical and commercial support.

The franchisor is also responsible for developing the brand image. It determines the business strategy and quality standards, ensuring that the brand concept is implemented and adhered to. The franchisee, for its part, remains fully responsible for the human and financial resources it commits.

What should franchise agreements include?

The franchise agreement sets forth the terms and conditions for operating the brand. It must include:

• How proprietary knowledge will be shared (initial training, operations manual, or both)
  
• Level of support to be provided while the business is in operation (technical updates, continuing education, etc.)
  
• Payment terms for royalty, including amounts and due dates
  
• Contract duration, which could be fixed or indefinite (franchise agreements generally last five to 10 years)
  
• Terms and conditions for termination, renewal, or transfer, as well as any resulting consequences
  
• Territory exclusivity and a noncompete clause
  
• Franchise network supply sources
  

How much does it cost to start a franchise?

Joining a franchise is a significant financial investment. You must budget for the franchise fee, which is the initial amount you must pay to join the network. The amount is determined by the franchisor and can range from €5,000 to over €50,000 depending on the brand’s reputation.

You should also plan for the cost of equipping and furnishing the store, as well as purchasing the initial stock to launch the business. You might also need to hire a lawyer to draw up the franchise agreement or establish the company, which can add to startup costs.

Throughout the duration of the contract, franchisees must pay periodic royalties to the franchisor. The amount is usually based on revenue or profits generated. Franchisees should also anticipate costs for a local marketing budget and for the supplies and equipment needed to run the business.

What are the advantages of a franchise?

While franchises can be expensive, they offer many advantages:

• Immediate brand recognition, as the brand is already established (offering a real competitive advantage)
  
• Access to a ready-made network and franchise resources
  
• Use of a proven concept and expertise (since franchising is the replication of a successful model), reducing the risk of failure
  
• Initial training and ongoing support throughout the life of the business (accelerating profitability)
  
• Relatively quick startup times
  

In return, the franchisor benefits from multiple points of sale, greater visibility, and increased brand awareness and profitability at a lower cost, as creation and maintenance of the business are the responsibility of the franchisee.

What are the constraints of a franchise?

Franchisees are contractually bound to the franchisor, forcing them to accept certain restrictions on their business activities. The franchise agreement limits autonomy and creativity, which can be a source of frustration. Franchise costs can also reduce profit margins and diminish the overall profitability of the franchisee’s business.

How can you start a franchise?

To launch a franchise, you need to:

• Conduct thorough market research to identify an industry and brand that matches your skills
  
• Determine your financial capacity and create a budget
  
• Evaluate the stability of the franchises that interest you (profitability and potential, support provided, network size)
  
• Write a business plan after choosing a franchisor aligned with your goals
  
• Choose the ideal location
  
• Complete the steps for starting a business, such as selecting a legal structure, e.g., société par actions simplifiée (SAS), limited liability company (SARL), single-owner limited liability company (EURL), société anonyme (SA), etc. Set aside personal capital (on average, franchisees set aside 30% of the total investment cost to cover the franchise fee, store renovations, and startup inventory)
  
• Sign a franchise agreement
  
• Comply with the franchisor’s requirements throughout the life of the partnership
  

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