Full Definition of Franchises and Franchising Law

Franchise law, also termed franchising law, pertains to the permittance or license that allows an individual or entity to market the goods or services of a company in a specific region or territory under the company's brand name or trademark. In the United States, franchising regulated by the federal courts as managed by the Federal Trade Commission (FTC).

Franchise is also commonly used to refer to a grant of the right to operate and share in the profits of a business or sell goods or services under a brand or chain name. Franchise is defined, under 15 U.S.C. § 2801(1)(A)(i)-(iv), as “any contract between a refiner and distributor, a refiner and a retailer, a distributor and another distributor, or a distributor and retailer under which a retailer or distributor uses the trademark of an oil company in connection with the sale of motor fuel.” Brewer v. Exxon Corp., 626 F. Supp. 76, 78-79 (E.D. Tenn. 1985) Franchise may mean the right one has to operate a store or sell goods or services under a franchise agreement. In a franchise business relationship, the owner (the franchisor) licenses others (the franchisees) to operate outlets using business concepts, property, trademarks and tradenames owned by the franchisor.