An agreement between two parties which grants the franchisee a right to exploit a franchise in return for direct or indirect financial consideration and includes obligations as to name, sign and presentation of shop premises, communication of know-how to the franchisee and continuing provision of commercial or technical assistance for the duration of the agreement. In essence, the franchiser licenses the franchisee to use the franchiser's distinctive trading format while remaining an independent trader. The franchiser is paid royalties for the licence to use his intellectual property rights and maintains control over the franchisee, to protect those rights and maintain the reputation and identity of the franchise.