franchise 1) n. a right granted by the government to a person or corporation, such as a taxi permit, bus route, an airline's use of a public airport, business license, or corporate existence. 2) n. the right to vote in a public election. 3) v. to grant (for a periodic fee or share of profits) the right to operate a business or sell goods or services under a brand or chain name. Well-known franchise operations include McDonald's, Holiday Inns, Ace Hardware, Rexall Drug Stores, and Amway Distributors. 4) n. the right one has to operate a store or sell goods or services under a franchise agreement, as in "we have the Taco Bell franchise in our town." 5) adj. referring to a "franchise tax" which is placed on businesses (especially corporations) for the right to conduct business, as distinguished from a tax on property, income or profits tax.

Source: http://legal-dictionary.thefreedictionary.com/Franchise+system

According to
Steven C. Michael
Franchising, in which independent businesses operate under a shared trademark using a common production process, is used primarily by service businesses. It is an enduring and pervasive organisational form. As an organisational form, franchising has a large and visible presence in consumer industries such as restaurants, lodging, auto repair, real estate, hair styling, and specialty retailing, where it has captured typically thirty to forty percent of sales. Business services in which franchising is prominent include temporary employment, commercial cleaning, printing and copying, tax preparation, and accounting services. Recent areas of growth include home health care, business signage, and child development and education.
Historically, franchising was introduced in the United States in the early 20th century by manufacturers in order to secure local distribution of their product (Dicke 1992). Franchise