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The Franchisor makes a profit form the initial franchise fee paid by the franchisee to secure the franchise. Continuing profit is then made from ongoing royalty fees which are based on turnover of the franchised outlet on an annual basis. Profit is also made from the supply of goods or services to the franchisee from bulk buying discounts gained by the franchisor when central buying contracts are in place. The franchisee gains continuity of supply and consistency of quality of goods and still benefits from a lower price generally than they could negotiate individually.

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