Basic Types Of Franchising

The Franchise Magazine:

Investment franchise: The franchise owner puts up substantial funds to capitalise on a high-cost franchise system and, although retaining overall strategic management, invariably hires others to manage the franchise outlet. Examples are hotel and restaurant franchises.

Management franchise: The franchise owner controls several territories or a region, or manages a team of operatives. Examples are van-based franchises run from regional HQs, depots or hubs.

Executive franchise: The franchise owner runs a one-man white-collar business, involved in areas like financial services, personnel, consultancy or project management. Premises are not vital because work tends to be taken to client premises. Examples are debt and cost control consultancy franchises.

Retail franchise: The franchise owner makes a significant investment in commercial property, costly equipment and staff to help operate a high-yield business system, which can often be sold at a profit should the franchise owner wish to retire and capitalise on the investment. Unlike the investment franchise, owner-operators are the norm here. Examples here are high street fashion and hi-fi chains.

Sales & distribution franchise: The franchise owner is on the road, selling and/or distributing products in the territory and where other driver-delivery personnel could be hired to cover areas as the customer base grows.

Mobile servicing (job) franchise: The franchise owner makes a lower level of financial investment to buy the right to operate, typically, a man-and-van home-based service, installation and/or repair business in areas like cleaning, motor services or maintenance.

Bear in mind that most franchisors now like to view their opportunities as more mature ‘management franchises’. Even those that start as job-type franchises are generally accompanied by encouragement for franchise owners to aspire to developing a management franchise, whereby they employ operatives and focus more on managing and growing the business.

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