The difference between franchise and company-operated is that in a franchise model, individual franchisees buy the rights to operate a location or multiple locations using the brand and business model of the parent company. The franchisee typically pays an initial fee and ongoing royalties to the franchisor. In a company-operated model, the parent company owns and operates the locations directly, maintaining full control and retaining all profits. Company-operated stores bring in more revenue to the parent organization, but come with higher operating costs. Conversely, franchised stores bring in less revenue as they only pay fees to the parent, but because the operating costs are covered by the franchisee, the margins are greater for the parent.