TYPES OF FRANCHISES
There are many types of franchises available. If you are looking to start a new franchise business based on a proven business model, it is important to know which industry sector you would like to be involved in, the level of financial commitment you have available or can raise, and the commitment of your time involved.
The unit model is the most well known model of franchising and the franchisor will usually expect only a percentage return from its franchisees, but will retain control over product development, branding and distribution.
A master franchisee will be able to control a group of franchises in a designated country, state or region and will usually have similar rights as a franchisor to establish market potential, recruit local franchisees and provide the training and support for their area.
There are five main types of Franchises, broadly broken into manual and executive in the way they operate.
1. Business to Business Franchises – The type of franchisee in these businesses will be out negotiating the provision of services or products to other business and will not be directly in touch with consumers. For this type of franchise premises may often be required for the production side of the business, such as printing, communications, or sign and design manufacture.
2. Management Franchises – This type of franchise is typically run from regional or geographic head offices and will involve the development, management and co-ordination of a group of operatives or team of providers for the service or product. This type of franchise can be either a manual franchise such as van based businesses and service sector providers or executive franchises such as training, education, and white collar services. This type of management franchise will not be directly dealing with the end consumers or receivers of the products or services. In this type of franchise, the franchisee will be responsible for the marketing and management of the business while staff will be responsible for the sales of the product or the provision of the service.
3. Retail Franchises – This type of franchise will usually be owner operated from a retail outlet, in the high street or retail park. An established and proven brand with products and service will provide revenue from walk in customers purchasing direct. This type of franchise can be found in many different industries including fashion, IT, technology, food, education, leisure and services. Retail franchises will require the right location and customer base in order to create the sales of the products or services with good customer service through their employees. The retail type of franchise will often require significant investment with rent and design costs to create the image of the brand chosen.
4. Investment Franchises – This type of franchise requires a significant amount of financial investment and the franchisee will normally work in a managerial and advisory role rather than in a direct manor. For this type of franchise experience in managing a large team of employees is usual, such as a hotel, a restaurant, or department store. The franchisee, often a corporate investor, will delegate the running of the business to an executive team.
5. Single Operator Franchises – This type of franchise will involve a single operator selling products or providing a service within a specific trade or industry. In this type of franchise the franchisor will provide the brand name or trademark together with relevant equipment, uniforms and marketing material in order for the franchisee to sell the products or deliver the services to an established standard and reputation. With smaller levels of investment, this type of franchise is suitable for home based business, mobile operators or smaller start up businesses. This type of franchise relies on brand recognition and quality assurance based on reputation and recommendation. An executive single operator franchisee, with the types of franchises including accountants, product or skill trainers and consultants, will have knowledge and experience in their field of business.