In a franchise system,:

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In a franchise system, the franchisee pays a lump sum plus a royalty on all sales in return for the right to operate a business in a specific location. The franchisor provides the name, format, training, advertising, and ongoing support to the franchisee, but the franchisee generally has some control over store design, product or service offerings, and management decisions. Option A is incorrect because it describes the opposite scenario, where the franchisor operates a retail location. Option C is incorrect because it suggests that franchisees have complete control over certain areas, which is not usually the case. Option D is incorrect because franchisors and franchisees both receive profits, and the payment structure can vary. Option E is partially correct, but franchisees are not solely responsible for system development - this is typically an ongoing collaboration between franchisor and franchisee.

In a Franchise System