Franchising is a kind of flexible business where people own and control a company but get the brand and support of a bigger business. Whether you wish to launch a home business or manage a multi-unit operation, franchising could open many different doors in various industries. Here, we’ll examine the kinds of franchises and their differences and advantages.
Kinds of Franchising
Given below are the various kinds of franchising:
1. Job-Franchise
A job franchise is for somebody who wishes to have their business and operate it themselves with little assistance from others. Such a franchise generally requires little investment and it is therefore available to many budding entrepreneurs. Job franchises are generally done from home or a mobile location and therefore are flexible and simple to operate.
In a job franchise, the franchisee performs for themselves by offering services or selling merchandise to clients. This kind of franchise is for someone who likes working hands on and with their clients directly. Examples of job franchises include:
- Cleaning services: Offer industrial or even residential cleaning.
- Lawn care: Lawn maintenance along with landscaping.
- Mobile coffee business: Serving coffee and snacks from a mobile cart or truck.
- Children’s activities: Running classes, clubs or events for kids.
2. Investment Franchise
An investment franchise isn’t a job franchise. Such a franchise involves an enormous investment in capital and is generally a huge scale operation. The franchisee typically has less involvement in running the business everyday and focuses much more on operating the company and achieving financial targets.
Investment franchises are for individuals or corporate investors with proven commercial experience and financial resources. Such franchises typically entail a management team handling daily operations. Examples of investment franchises are:
- Hotels: Managing a hotel chain under a famous brand.
- Large restaurants: Managing a network of eatery locations.
- Retail stores: Running several retail outlets.
- Gyms: Supervising a fitness chain.
3. Distribution Franchise
A distribution franchise has the franchisee distribute or sell the franchisor’s products. Unlike other franchise models, distribution franchisees generally operate independently of the franchisor, utilising their brand and operational procedures. This model allows the franchisee greater independence and the product line plus support from the franchisor.
Distribution franchises are common in industries where special merchandise is sold to customers or companies directly. Examples include:
- Auto dealerships: Selling used or new vehicles from the manufacturer.
- Electric appliance retailers: Offering home and office appliances.
- Vending machines services: Provision and upkeep of products like stocked vending machines.
4. Business Format Franchises
People typically think about a franchise in the business format franchise. In this particular model, the franchisor offers the supplies to begin and operate the company on the franchisee. That consists of equipment, training, operational systems, supplier contracts, continuous support and marketing programs.
Business format franchises may be take-out restaurants or business solutions. This particular model offers a structured road to business ownership and it is suitable for individuals seeking to go by a proven system. Examples of business format franchises are:
- Fast food restaurants: Running a restaurant with a proven name like McDonald’s or Subway.
- Coffee shops: Running a cafe with a known name like Starbucks or Dunkin’ Donuts.
- Business services: Services like printing, delivery, or preparing a tax return.
- Personal care: Services provided consist of hairstyling, massage therapy or fitness instruction.
5. Conversion Franchise
A conversion franchise is a conversion of an independent small business to a franchise branch. This model enables a franchisor to rapidly expand a network by incorporating established companies. For the franchisee, it provides the familiar brand’s operational support, marketing and training.
Conversion franchises are common in industries where independent companies could use branding and support from a bigger network. Examples include:
- Real estate agencies: Independent real estate businesses joining a national franchise.
- Dental and medical clinics: Private practices joining a branded health network.
- Hairdressing salons: Existing salons with bigger chain branding and systems.
The Benefits of Franchising
Franchising offers numerous advantages for the franchisor and franchisee. For franchisors it offers a low capital investment route to brand development and increased market reach. For franchisees, it provides the chance to own and operate a company supported by a reputable proven business model and brand.
The benefits of franchising are:
- Brand recognition: Franchise owners cash in upon the brand name and client list of the franchisor.
- Training & Support: Franchisors train and assist franchisees to succeed.
- Marketing help: Franchisees have access to national & regional marketing campaigns in addition to materials.
- Proven business model: Franchises are derived from a tested and successful business model, lowering risk of failure.
- Group purchasing power: Equipment and supplies are discounted for franchisees in bulk.
Conclusion
Numerous industries provide franchise opportunities to new business owners. Understanding what sorts of franchises exist – work, investment, distribution, business format and conversion – can help prospective franchisees select the right model for them. Regardless of whether you wish to develop a task by yourself, buy directly into a big scale operation, or transform your organisation into a franchise, there’s a franchise business opportunity for you.
FAQs
What are the formats of franchising?
Four formats of franchising are:
- Single-Unit Franchise: One location, belonging to the franchisee.
- Multi-Unit Franchises: Some locations owned by one franchisee.
- Master Franchise: A franchisee sells sub-franchises inside a territory.
- Area Development Franchise: Franchisee agrees to open various units in a region during a particular period.
What are the 5 kinds of franchises?
These five kinds of franchises are:
- Job Franchise: Small, often home based and with little investment.
- Investing In Franchise: Huge scale capital intensive operations like hotels and resorts.
- Distribution Franchise: Selling or distributing products (usually under the franchisee’s brand).
- Business Format Franchise: Comprehensive support and branding – common in fast food chains.
- Conversion Franchise: Existing businesses became franchise branches.
What are the 4 P’s of franchising?
The 4 P’s of franchising include:
- Product: Services and goods supplied by the franchise.
- Price: Price to buy & operate the franchise.
- Place: Location and Distribution channels.
- Promotion: Attractive marketing/advertising tactics.
What are the two classes of franchising?
The two classes of franchising are:
- Product Distribution Franchise: Distributes the merchandise of the franchisor.
- Business Format Franchise: Branding, support and operational guidelines for a business system.
How many kinds of franchises exist in India?
Four kinds of franchise exist in India:
- Single-Unit Franchise: One location, belonging to the franchisee.
- Multi-Unit Franchises: One location by one franchisee.
- Master Franchise: A franchisee sells sub-franchises inside a territory.
- Area Development Franchise: Franchisee agrees to open various units in a region over time.
