Franchise agreement

Franchise agreement is when someone who owns a big and popular company, let's call it "McDonald's", lets other people open up "McDonald's" restaurants in different locations by giving them permission to use their name, logo, and business model.

So, let's say you love eating burgers and wish to open your own "McDonald's" restaurant but you don't know how to do it. You would contact the main McDonald's company and ask for permission to use their brand name, logo, and business model. They would then give you some rules to follow like how to make the burgers, how to market the restaurant, and what type of uniforms to use.

This is where the franchise agreement comes in. It is a legal document that both you and McDonald's would sign to detail all the rules and regulations for opening and running the restaurant. The document would also outline how much money they will be earning and how much you will be earning.

In simpler words, if you want to open a "McDonald's" restaurant, you need permission from the main "McDonald's" company, and then you both sign a paper that tells you what to do and how much you will make.