Four (#4) Types of Franchise Businesses

By definition, franchise businesses are all about following a reputed brand, using its methods of business, and paying a small fee to the “franchisor.”. Now, the business gets the liberty of knowing what is franchising the franchisor’s secrets and consequently using its “fame” to make some money.Around the world, there are many franchise ventures. In fact, some of these ventures have spread across all continents and are making billions of dollars each year. This includes intangibles, food varieties, and tangible items. In order to become a franchise business owner, you need to meet the requirements of the franchisor.

Important types of franchise businesses:

#1 Business Format

Business Format Franchises are considered to be the most commonly found types in the market. This is where a business chooses to expand by supplying “newbie business owners” with the recipes of a well-established one. Both the trademark, name, and policies will be shared with the newbie business.

Most of the time, the franchisor would help the newbie build and launch the brand. In the long run, the parent company would assist the independent owner with tips and instructions on how to keep the business running. As a result, the independent owner of the newbie business would pay royalties and a fee. Many a time, the franchisor would be responsible for supplying “raw materials” to the newbie.

A very good example of this type of franchise business would be fast-food joints.

#2 Product Franchise

As suggested by its name, this type of franchise focuses on the sale of products. The manufacturer determines the methods used by retail stores for shopping and selling their products. Multiple rules and regulations often govern product franchises. However, the newbie business has the privilege to use the manufacturer’s actual trademark and name.In order to secure this right, the newbie business (or store) owner has to pay a large amount of money. Also, they need to buy products from the manufacturer.

A suitable example of this kind of franchise would be tire stores.

#3 Manufacturing Franchise

Next in line would be the manufacturing franchise. This type of franchise businesses receives “permissions, or grants,” from the manufacturer. Thus, they will be allowed to sell goods and even produce items using the parent company’s trademark and name.

This franchising method is extremely popular among beverage and food companies. For instance, the bottlers tend to obtain the rights from “parent” soft drink companies. Consequently, they will be allowed to produce the drink, manufacture the bottle, and eventually distribute the soft drink.

#4 Business Opportunity Ventures

The last type of franchise business on this list would be “Business Opportunity Ventures.”. This is where independent business owners take the risk of buying and selling products that belong to a different company. The parent company is responsible for providing the new independent business owner with accounts or client information. Whenever a successful business happens, the independent business owner has to pay a fee to the parent company.

A common example to describe this type of franchise business would be “vending machines.”.

Future of Franchising

Franchising has seen many success stories.McDonald’s and KFC are famous franchises around the world. Since the early 1950s, this business model has been famous. It is not going to disappear anytime soon. With rapid population shifts and new metropolitan areas, the scope for different types of franchise businesses is only going to get better. In fact, universities and schools have started to include “franchising” in their curricula.