For those of you who may now be considering buying a franchise, there are some basic things you need to know about the franchise option for business ownership. Many people don’t realize that franchising, like any other business you start, has many facets of its own, and things you’ll need to become familiar with and learn before you even begin your search for the perfect option for you. Getting really familiar with some of the more common terms in franchising helps, yes, but it also helps to know what kinds of franchises exist. It’s true, for every industry, there is a franchise, but franchises basically fall into three basic types.
Here, we’ll name those three types of franchises and explain a bit about what each one entails.
Product franchises are the first type of franchises that we will look at and explore. A product franchise is a great way for manufacturers to take control of how a retailer markets their product. The manufacturer gives the franchisee permission to distribute the product and allows the retail store owner to use that brand and trademark to further enhance promotion and build consumer trust. Produce franchises are often a food service oriented business. However, the downside is that these can sometimes be based on fads, so plan your market research accordingly. Steve Steve Rosen, CEO of FranNet, had this to say about product franchising:
“A lot of produce businesses are based on fashion. It goes in cycles. People love coffee or ice cream or things high or low fat; they love or hate donuts. You have to keep that in mind.”
A business format franchise is likely to be one of the things that comes up most in your search for the perfect franchise. You will find that this is a very popular type of franchise and there is a good reason for it. The company usually gives the franchisee not only a great system for running the business itself, but also often lends the name and trademark of the parent company. These are often well-known brands and automatically inspire trust, so this is a huge benefit for the business format franchise. The business will also usually provide a great deal of assistance in not only getting started, but also in the ongoing management of the business, so this format is a great way for someone to become a business owner. , but without flying blind. Think of a business format franchise as a kind of safety net to ensure the success of the franchisees that are involved in it.
Manufacturing franchises are another area where a lot of money comes into play and they are also quite common. These types of franchises generally give a group or organization the rights to produce or manufacture a certain product again, with the ability to use that name and trademark for marketing and promotional benefits. This type of franchise is usually food and beverage, but can sometimes be affiliated with other products as well.