Types of Franchising Business
If you are planning to enter to the world of franchising business, you must know its nature first. You should keep yourself familiar with business terms, types of franchises and of course, you must first determine what franchising business is suited for you.
The role of a franchise consulting agency is to help you understand everything about your franchising business. We, at FranFrog, aim to help you decide what business is suited for you and of course, we prepare advices and tips for you to become a successful franchiser in the future.
Before getting yourself familiar with the types of franchising business, we should first define the word franchise.
Franchise means that the company has given you the authority to sell or distribute the goods or services to the customers in an exchange for a lump sum of money as payment.
There are many types of franchising business in the world and you should be familiar with almost all of them (if not all). With that, our franchise consulting agency has prepared the types of franchises that you can venture in the future:
- Business format franchise
This is the most common type of franchising business and it is where the company itself expands the popularity of the business or company through supplying business owners with the established name of the company, its trademark and an established business. The company will generally assist and guide the independent owners or businessmen in launching and running the said company.
In exchange, the private owner or businessman will pay a lump sum of money and royalties. The franchise will commonly buy the supplies for the business to the company. An example of this franchising business is the fast food restaurants.
This is the type of franchising business by which the franchisor will allow or license the private businessman to use the brand or the official trademark of the franchise for a little capital or payment. This kind of franchise is naturally home-based but is not limited to it. An example of this type of franchising business is cleaning or handyman franchise which is operated online. The process which is operated online includes training support, initial purchase of the franchise, when fees are fixed and is going to be paid in advance, online and annual subscription.
This type of business is created by a businessman who realized that not all people wanted to earn millions or that some people wanted to make a business but do not want to run a business with employees.
- Product franchise
This is a type of franchise by which the manufacturers allow the private businessman to use the franchise name but the distribution of the products must be controlled entirely by the manufacturers. For the private owner to obtain this business or franchise, he or she must pay a sum of money and royalties or buy a minimum amount of products. An example of this kind of franchising business is tire stores and exclusive brand name stores. It is sometimes referred as trade name franchise.
- Manufacturing franchise
This is when the manufacturer is given permission by the franchiser to produce and sell the goods or services using the name and trademark of the franchise. The most common type of this business is food and beverage companies. For an instance, the bottlers will often get the rights from the soft drink company to produce the bottle and distribute the soft drinks. The soft drink company will also sell these supplies to the regional manufacturing franchises.
There are different types of franchising businesses and you should know its nature. Be sure that you are well-informed on this kind of matter. Also, if you have any questions or issues regarding franchising business, you may ask for some help from our franchise consulting agency. We will without doubt give you the best advice for your problems.
For more information about franchising, visit our website at www.fran-frog.com.
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