20 August 2026
A franchise is a business model in which a brand allows a franchisee to use its name, know-how and operating system to develop their own business. In return, both parties assume specific conditions, responsibilities and financial obligations defined in a franchise agreement.
What is a franchise and how does it work?
To understand how a franchise works, it is important to distinguish between two main roles. The franchisor owns the brand and the business model, while the franchisee is the entrepreneur who invests in and manages a unit following the processes and standards established by the network.
The franchisor normally provides the brand, know-how, procedures, training, technology and different forms of support. The franchisee is responsible for managing the business, developing local customers and complying with the terms set out in the franchise agreement.
In simple terms: how does a franchise work?
The franchisee remains an independent business owner, but does not start completely from scratch. Instead, the business is developed using a brand, processes, tools and experience that have already been built by the franchise network.
What types of franchises are there?
Franchises can be classified in several ways. One of the simplest is according to the type of activity carried out by the business:
| Type | How it works |
|---|---|
| Service franchise | The franchisee provides services using the brand, methods and processes developed by the franchise network. |
| Distribution franchise | The franchisee sells specific products within the system defined by the franchisor. |
| Industrial franchise | The franchisor transfers processes, technology or knowledge required to manufacture or commercialise specific products. |
There can also be different structures depending on the number of units or the territory involved. For example, an entrepreneur may operate a single unit or develop a multi-unit franchise with several Centers.
How much does a franchise cost and what payments can be involved?
The cost of a franchise varies according to the sector, business model, premises and specific conditions of each network. For that reason, it is not enough to compare the initial franchise fee alone.
- Initial franchise fee: an upfront payment for joining the network and gaining access to the system.
- Royalties: recurring payments defined in the franchise agreement, when applicable.
- Marketing or advertising contributions: possible payments used to support communication and brand-development activities.
- Premises, equipment and fit-out: the investment required to prepare the business for operation.
- Working capital: resources required to cover expenses during the initial phase of the business.
Before making a decision, it is important to assess the total investment, recurring costs and available financing. In the case of MBE, you can explore the financing options available to candidates, always subject to the assessment, terms and approval of the relevant financial institutions.
What are the benefits of a franchise?
A franchise does not eliminate business risk or guarantee results, but it allows an entrepreneur to develop a business using resources that have already been created by the network.
- Know-how: access to the knowledge and procedures developed by the franchisor.
- Brand: the possibility of operating under an established business identity.
- Training and support: assistance before opening and during the development of the business.
- Technology: access to tools and systems used across the franchise network.
- Network economies: the possibility of benefiting from certain agreements, resources or processes developed across the network.
In return, the franchisee must follow the brand's procedures and standards and meet the obligations established in the franchise agreement. That is why it is important to understand what support the franchise network provides and which responsibilities remain with the business owner.
How does an MBE franchise work?
Mail Boxes Etc. operates as a service franchise. Each franchisee-managed MBE Center can provide shipping, logistics, e-commerce, packaging, printing and other solutions for businesses and individuals.
The franchisee manages and commercially develops the Center while relying on the brand, technology, processes, training and resources provided by the network. This combination allows different lines of activity to be developed within the same business.
If you would like to understand in more detail what an MBE Center does, explore the services and business model offered by MBE.
Now that you know how a franchise works, are you ready to explore the next step?
If you are considering this business model, the next step is to assess the investment, territory, agreement, support and commercial activity involved. You can learn how to open an MBE Center and discuss your questions directly with the expansion team.
