Learn in the textbookLeveraging External Resources and Inter-Company Collaboration
DefinitionA franchise chain (フランチャイズチェーン) is a store network that grows through contracts in which headquarters lets franchisees use its brand name and store operating methods, and the franchisees pay a royalty (ロイヤルティ) in return.
ExplanationHeadquarters is called the franchisor (フランチャイザー) and each store the franchisee (フランチャイジー), which runs its store as a business separate from headquarters. Because new stores are funded by franchisees, headquarters can expand its network quickly with little capital of its own. Franchisees, for their part, can open for business with a well-known brand and proven operating methods.
AnalogyIt is like opening your own shop with a popular restaurant's sign and recipes and paying a monthly fee to use them.
Memory hookThe English word franchise means a special right or license to do business, so the chain is a group of stores licensed by headquarters.