Imagine a store owned by an individual with a particular concept.  If the business is successful, the owner may develop a second or third store and hire employees for the day-to-day operations.  At that point, if the entrepreneur still wants to expand but prefers not to operate additional stores himself or herself, he or she may decide to “franchise” the store name and business system to an independent business person known as a franchisee.  In return, the entrepreneur may ask for an initial fee and/or a continuing royalty payment based on a percentage of that franchisee’s sales.  The business is now franchised.