In franchising, the person or firm buying the right to operate is called the franchisee.
The franchisee receives permission to run a business using the franchisor’s brand, trademarks, procedures, and commercial system. This is not simply a purchase of a name: the franchisee generally agrees to follow detailed operating standards and to pay fees, often including an upfront charge and ongoing royalties based on sales or another agreed measure.
Franchisees are usually responsible for investing in and managing the local operation. They may hire employees, lease premises, serve customers, and bear much of the day-to-day financial risk. The franchisor typically provides training, marketing, manuals, product specifications, and continuing support while monitoring compliance.
A common mistake is reversing the two terms. The franchisor grants the rights and controls the system; the franchisee buys those rights and operates within the system. A franchisee is therefore neither a wholesaler nor an underwriter, although it may purchase supplies from approved wholesalers.