Types of Business Franchises

Woman on a franchise businessIf you are looking to buy a franchise, it helps to know the available categories. The idea is to work on a proven model. Therefore, first, identify the area or sector of an industry that you prefer to be part of. Consider also your financial status.

Secondly, find a broker franchise to help you with the whole endeavour. Sometimes you may only afford one type of franchise, or it could be that a specific type will work better in your area. The categories of franchises are as follows:

Business-format franchises

Here, the franchisor will sell the trademark rights and the name. They will also sell the business systems and processes. It is the buyer’s job to develop the services and products for the customers, but he buys the full business system.

That is why, for example, food will taste the same from different McDonald’s outlets even if they are from different countries.

Product franchises

Here, manufacturers will control all the retail stores that sell their products. In the contract, store owners may use the trademark and the name.

However, they must pay a fee to buy the products that will qualify them for a franchise. Most electronic shops work this way so that the manufacturer will benefit more than the dealer.

Manufacturing franchises

For these franchises, you have to get the rights to use the trademark and the name. You will then set up your manufacturing plant. From there, the company sells you the product extract, for example, and you combine the ingredients and package the final product.

Arguably, it will not matter whether you choose a franchise well or not if you do not commit to consistency. While you are buying a working system, there is no guarantee that it will do as well. However, since all models will follow the parent business model, your chances of success are high.