The term 'franchising' can describe some very different business arrangements. It is important to understand exactly what you're being offered.
This is the most common form of franchising. A true business format franchise occurs when the owner of a business (the franchisor) grants a licence to another person or business (the franchisee) to use their business idea - often in a specific geographical area.
The franchisee sells the franchisor's product or services, trades under the franchisor's trade mark or trade name, and benefits from the franchisor's help and support.
In return, the franchisee usually pays an initial fee to the franchisor and then a percentage of the sales revenue.
The franchisee owns the outlet they run. But the franchisor keeps control over how products are marketed and sold and how their business idea is used.
Well-known businesses that offer franchises of this kind include Prontaprint, Dyno-Rod and McDonald's.
Different types of sales relationships are also sometimes referred to as franchises. For example:
Some businesses offer franchises that are really multi-level marketing schemes. This is where self-employed distributors sell goods on a manufacturer's behalf. You get commission on any sales you make, and also on sales made by other distributors you recruit.
Be aware that some multi-level marketing schemes may be dishonest or illegal. Download the Trading Schemes Guide from the Department for Business, Innovation & Skills (BIS) website (PDF, 66K).