How Many Types Of Franchises Are There?

Types of franchises

When it comes to franchising it is a relatively flexible method and any business can be franchised according to different factors. Entrepreneurs are choosing different types of franchising according to their interests and skills. There are many types of franchise models available in this growing industry among these are Job franchises, Product or distribution franchises, Investment, Business format, and Conversion franchises. 

Read More: Best franchise opportunities in India

Job-Franchise

A Job franchise is a home-based type of franchise. The best part of this franchise is that this low investment franchise is for those who want to run a small franchised business. This low-investment opportunity franchise is based on a simple module, it can be operated from home or any other mobile basis. 

  • Franchisees can start with limited stock, can purchase minimal equipment, and sometimes can go for a vehicle as well.
  • In this type of franchise, the franchisee creates jobs as well as income. This franchise is diverse and provides a wide range of services.
  • Being a low-investment franchise it also has less overhead expenses, flexible, proven services, and strength training and other support.
  • Many different services fall under this group like cleaning services, travel services, cell phone services, mobile coffee business, clubs and classes, real estate services, shipping services, corporate services, children’s activities, Event Planning, Residential lawn care, and much more. 

Read More: The Challenges You Will Face In Franchise Business

Investment Franchise

It is a large-scale operation franchise, this type of franchise requires significant capital expenditure and needs a significant professional management team to operate. The franchisee invests money and engages team members to operate it. 

  • This type of franchise requires large-scale projects with a large capital investment like hotels, larger restaurants, some retail franchises, and other gym brands. Famous hotel investment franchises are Comfort Inn, Days Inn, and Holiday Inn Express.
  • The franchisee has experience with existing ownership and is looking for capital gain on exit. With the same or similar sector experience, the focus is to produce a return on their investment. 
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Product or distribution franchise

This type of franchise focuses on distribution and products, where the franchisee distributes the franchisor’s products. It is a product-driven franchise and is based on supplier-dealer relationships.

  • In this type of franchise, the franchisees are restricted and can not run the entire business system. The franchisor licenses its trademark granting franchisees access to operate and sell products without the franchisor’s name and operational systems. In this system, franchisees can run franchises under their own identity.
  • Product-driven franchises generate the highest percentage of total retail sales and provide large product services including car dealerships and car repairing, electrical appliances, bicycles, computers like Dell, Asus, Hewlett Packard, and much more. Some familiar automobile product distribution franchises are Exxon, Ford, John Deere, Caterpillar, GMC, etc.

Read More: How To Start A Franchise?

Business format Franchise

In this type of franchise, a franchisee gets access to the franchisor’s trademark but they don’t have to face any restrictions while operating the business. Business format franchise has low operating costs as in some models franchisors negotiate prices. Under a minimum amount, a franchise can witness ease in expansion. As the business model is proven, franchisees experience low risk in business. Franchisors have the best business knowledge and are capable of dealing with local marketing conditions. Most franchisees prefer this type of franchise as they are provided with everything needed at every step. 

  • Under this format, franchisees enjoy every kind of support from training to marketing, equipment to premises, and much more. 
  • This type of franchise comes with a successful concept, a reputed and proven establishment, and a recognized brand.
  • Franchisees get business assistance and training programs which help in the expansion of the brand and a successful future franchise. Further franchisees get operating support and an efficient management system. 
  • This format provides a marketing assistant that benefits both the brand and its wings. 
  • This famous franchise format covers industries like fast food, business services, retail, fitness brands, personal care, coffee shops, and other restaurants.
  • Some familiar fast food business format franchises are Chick-Fil-A, McDonald’s, Subway, and KFC. This type of franchise covers restaurants like Olive Garden, Longhorn, and Golden Corral. Fitness brands like Gold’s Gym, Planet Fitness, Anytime Fitness, and famous retail business format franchises are The Children’s Place, Abercrombie & Fitch, and Bath & Body Works.

Read More: Registrations And Documents Required For A Franchise

Conversion franchise

This type of franchise is a hybrid franchise, in this type of franchise system, the franchise grows by conversion meaning by converting independent businesses into franchise units in the same industry which is why it is a modification of standard franchise relationships. Here the parent company’s products and services are adopted by the franchisee. 

  • The Existing franchisors witness rapid growth in the form of units and income. Independent companies also benefit from conversion franchises.
  • This type of franchise possesses marketing benefits, helping in increasing the number of markets with brand recognition power. Consumers get attracted by big franchise brands with big marketing budgets. 
  • Conversion franchise has a proven operating system. Franchisees get to use a proven, tested, and approved operating system so there is no need for experiments. This type of format introduces franchisees to a system that is tested and proven with time.
  • Here franchisees will be guided by more experienced companies leading to a successful growing business. 
  • This type of franchise is extensively used by electricians, florists, professional services, real estate brokers, and so on. 
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Franchise types based on opportunities

As we all know the business wing is growing rapidly and expanding exponentially all this has led to an increase in franchise opportunities. All these opportunities have been categorized into different types of franchise opportunities which are mentioned below.

Business Opportunity: This type of franchise provides franchisees access to use the name, trademark, and other products and services of a franchisor. In a Product Franchise, the franchisee is given a license by the franchisor to use its trademark for business. The franchisee gets the opportunity to operate a business under the name of a franchisor’s name and distribute its products and services. The product franchise business opportunity helps franchisees to upper hand in the business and the market.

Manufacturing Opportunity: if you are a food and beverage lover then this type of franchise is all set to provide you with opportunities in the food and beverage sector. This type of franchise helps in the expansion of business, providing consumer community and industrial goods. The Manufacturing Franchise type provides opportunities to run a business under the franchisee’s name. This type of franchise is most commonly used and it provides an opportunity to disturb its manufactured goods.

Business Opportunity Ventures: this type of franchise is adopted by independent businesses that want to run a business on their own. This type of franchise is based on pre-decided agreements. In this type of franchise, a business owner gets the opportunity to purchase and sells items of a company.  Further, the company supports these owners by providing clients and getting compensation as per the agreement. Business franchise opportunity ventures workes best for independent businesses. 

Read More: Franchise Agreement: Complete Information, Meaning, Benefits.

Types of a Franchise based on  Agreement

When we talk about franchise agreements, then we usually come across several types of franchises based on agreements, namely Single Unit Franchise, Multi-unit Franchise, Area Development Franchise, Master Franchise, and so on. 

Single Unit Franchise: in this type of franchise, the franchisee gets access to operate a single unit at one location. 

Multi-unit Franchise: in this type of franchise, the franchisee can run more than one franchise or multiple franchises. 

Area Development Franchise: this type of franchise is bound to certain geographical limits. Franchisees can run and open multiple units but under a specific boundary. 

Master Franchise: in this type of franchise a franchisee gets access to operate locations in a country. 

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Conclusion

Types of Franchise is a type of franchise model introduced To get a fit franchise for a franchisee. These types help the franchisee to understand the market situation and provide them with a blueprint for choosing the best format. This is a blueprint for franchisees to understand and select the best type of franchise model to remain ahead in this business game.

FAQ’s

Which one is a home-based type of franchise?

Which franchise requires large-scale projects with large capital investment?

Which franchise is known as a product-driven franchise?

Which franchise format does not have to face restrictions?

Business format franchises do not have to face restrictions.

What is a conversion franchise?

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