Franchising is a special type of vertical relationship between two firms usually referred to as the "franchisor" and "franchisee". The two firms generally establish a contractual relationship where the franchisor sells a proven product, trademark or business method and ancillary services to the individual franchisee in return for a stream of royalties and other payments.
The contractual relationship may cover such matters as product prices, advertising, location, type of distribution outlets, geographic area, etc.