A franchisor grants a licence (the "franchise") to another business (the "franchisee") to allow it to trade using the brand or business format.
Franchises are a significant part of business life in the UK:
• Franchises generated annual sales of £12.4 billion in the UK in 2007
• There are over 800 different franchised business formats in the UK and that number is rising by around 5% each year
• The average sales turnover per franchise outlet is £360,000
• 90% of franchises are reported to be profitable
• A franchise has average borrowings of £70,000, suggesting that banks are happier to make loans to franchise businesses than other start‐ups