A franchise is a store that operates under a brand name while being owned and managed by a second party. Franchises occur when the original store owner licenses the right to use their brand in a franchise agreement. 

These agreements typically include: 

Royalty fees: A franchisee pays regular royalty fees to the brand owner, usually monthly or annually. 

Product line-up: Agreements highlight product categories that a franchise can carry, generally aligning with the brand.

Prices: Franchises are given pre-determined pricing on products to ensure they align with the brand owner's storefront location

Operating policies: Brand owners specify operating procedures, such as return policies, in the agreement. 

Beyond these conditions, franchise owners have full control of the new location. They are responsible for associated operating costs and collecting all revenue earned on-site. 

Compared to chains, franchises tend to be low-risk opportunities for salon brands to expand. Owners do not have to worry about managing stores directly, as most startup costs belong to the franchisee. Salons typically give their franchises existing business and marketing plans to adapt the salon to a new location, but the responsibility of executing them is left to the franchisee. 

The drawback is that low-risk also means low-reward. While the franchisee has a higher cost burden, they are also entitled to far more revenue. Instead, owners collect revenue in the form of recurring royalty payments while the franchise agreement is active.