A franchise business is a special relationship of mutual effort governed by a franchising agreement. It provides a shared opportunity for growth through guidance and good faith obligations between the franchisor and franchisee.
The Franchising Code of Conduct defines the Franchise Agreement as:
“an agreement in which a person (the franchisor) grants to another person (the franchisee) the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially controlled by the franchisor”
For this right, the franchisee pays to the franchisor various fees and royalties for goods, training, use of intellectual property and marketing. For more details see the Franchising Code of Conduct, clause 5.