There are many types of franchise available, across a bunch of industries. If you wish to open a new franchise, you must know beforehand which industry you would like to be involved in, also the level of financial commitment to which you can commit, and the time available to invest for you personally. If you’re interested in learning more about investing in a new franchise then this article about six major types of franchises will help you to understand the correct industry to make a new start.
Typically, this is a home-based or low investment franchise that is taken by a person who wants to start & run a small franchised business alone and actually provide the services to customers. The franchisee usually requires small office premises, has to buy minimal equipment, limited stock, and sometimes a vehicle. A wide and diverse range of services that falls into the job franchise are travel agency, coffee van, corporate event planning, domestic lawn care service, plumbing, cell phone accessories & repair, real estate service, shipping service, pool maintenance, children’s services, etc.
2. Product Franchise
The product franchise is also known as a Distribution franchise. With product franchisees, retail controls the way products are distributed to their customers. Through such agreement, manufacturers allow retailers to distribute their products and to use their names and trademarks. To obtain these rights, store owners must pay fees or buy a minimum amount of products.
Some examples are:
Appliances (LG, sony, bajaj)
Beauty products (Lakme, Loreal)
Cars (hyundai, tata, maruti, ford)
Beverages (cocacola, pepsi, thumbs up)
Computers (dell, HP, lenovo)
3. Business Format Franchise
Business format franchising is the most popular type of franchise system. The franchisee also gets to use the franchisor’s trademark, but more importantly, it acquires a complete system to conduct the business and market the product and service. The franchisor provides a detailed plan and procedures on almost every aspect of the business, provides initial and ongoing training and support. It is the most popular type of franchise system and the one generally referred to when talking franchising. Businesses from more than 70 industries can be franchised, and the most popular are:
Fast food (mcdonalds, KFC, subway)
4. Investment Franchise
An investment franchise is usually a large-scale project which requires a large capital investment, like hotels and larger restaurants. The franchisees usually invest money and involve their own management team or franchisor to operate the business and produce a return on their investment and capital gain on exit.
5. Conversion Franchise
Conversion franchising is a modification of the standard franchise relationships. Many franchise systems grow by converting independent businesses into franchise units in the same industry. Franchisees adopt trademarks, marketing, advertising programs, training systems, and critical client service standards. They also typically increase procurement savings. This model has the potential for very rapid growth in terms of franchisor units and royalty fee income. Examples of industries that extensively use conversion franchising are real-estate brokers, florists, professional services companies, home-services, like plumbing, electricians, air conditioning, etc.
6. Manufacturing Franchise
Through a manufacturing franchise, a franchisor grants a manufacturer the right to produce and sell goods using its name and trademark. This type of franchise is common among food & beverage companies. For example, soft drink bottlers often obtain franchise rights from soft drink companies to manufacture bottles and distribute soft drinks. Major soft drink companies also sell the supplies to the regional manufacturing franchises.
We hope this information will help you to understand the types of franchise. You can read more about franchise here: What is a Franchise? Advantages and Disadvantages of a Franchise
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