Are you looking to start a franchise? While your earning potentials as a franchise owner largely depend on the industry and brand, running a franchise can be very lucrative.
Before you start a franchise, it’s important to learn about the different types of franchising opportunities. Read on to learn about the different types of franchises.
1. Product Distribution Franchise
In the product distribution franchise model, the franchisee utilizes their own space to sell or distribute products that belong to the franchisor. The franchisor allows the franchisee to do business using their brand name, and for this, the franchisee pays a cut to the franchisor.
The franchisor will supply all of the products to the franchisee for them to sell them. In this model, the franchisor lends support when it comes to marketing, advertising, and training (this isn’t the case with all franchise models). The advantage of this model is that the franchisee can use the franchisor’s trademark logo for their business, which helps to establish brand recognition and trust from the get-go.
Additionally, the franchisor doesn’t have full control over the operation of the business. The franchisee is able to run their own business under the franchisor’s brand name. Examples of product distribution franchises include John Deere, Coca-Cola, and Ford Motor Company.
2. Business Format Franchise
In this model, the franchisee has exclusive rights to use the trademark, goods, and services to run the business as a distribution network of the franchisor.
With a business format franchise, all aspects of the business are copied and replicated at each location. Some popular examples of business format franchises include McDonald’s and KFC. Many other fast-food chains are also business format franchises.
With this type of franchise, the parent franchisor is responsible for developing business strategies and branding the business. In this case, the franchisee still uses the trademark of the parent brand.
3. Management Franchise
This type of franchise focuses on management and service-based activities. With this model, the franchisee receives a license to carry out business under the name of the franchisor.
The business owned by the franchisor may include anything from home care services to hospitality services to healthcare services to senior care services. UPS and the Hilton hotels are two examples of management franchises. To learn about senior care franchise profitability, click here.
4. Manufacturing Franchise
A manufacturing franchise focuses on producing consumer and industry goods. The franchisor grants the franchisee the rights and licenses to run production units under the franchisor’s trademark name.
In addition to manufacturing products, the franchisee has the right to distribute the manufactured products.
Types of Franchising Opportunities: Are You Ready to Start a Franchise?
Now that you know about the types of franchising opportunities, it’s time to choose which model is right for you. Of course, it’s a good idea to choose an industry you’re passionate about and knowledgeable in, as this will give you more motivation to grow your franchise.
After you choose a franchise model, you still have a lot of work ahead of you. Check back in with our blog for more franchising tips!
