What kind of franchise




















Interestingly, although the business format franchise is the most popular, the product distribution franchise actually represents the highest percentage of total retail sales. This franchise focuses on the franchisee managing the franchise. The manager does not really need to part take in the day to day running of the business.

This type of franchise would be ideal for somebody with previous managing experience as it allows individuals with transferable skills to really take ownership of a business and lead it to success. Business-related skills such as having an entrepreneurial flair, preferably from experience, will only help you in the journey to success. For this type of franchise, you will also be required to pay fees for the ability to use the trademarks of a franchise, and your focus is on business development, overseeing the business and managing the team.

Your email address will not be published. Franchising The 5 Types of Franchising. Discover all types of franchising. The 5 Types of Franchising Aspiring entrepreneurs looking to get into a small business are increasingly choosing one of the different types of franchising. Job Franchise A Job Franchise is generally a low-investment franchise often home-based that can be operated alone or with minimal staffing less than 5. Through manufacturing franchises, a franchiser grants a manufacturer the right to produce and sell goods using its name and trademark.

This type of franchise is common among food and beverage companies. For example, soft drink bottlers often obtain franchise rights from soft drink companies to produce, bottle, and distribute soft drinks. The major soft drink companies also sell the supplies to the regional manufacturing franchises. In the case of Coca Cola, for example, Coca Cola sells the syrup concentrate to a bottling company, who mixes these ingredients with water and bottles the product, and sells it on. Franchisors benefit from franchise agreements because they allow companies to expand much more quickly than they could otherwise.

A lack of funds and workers can cause a company to grow slowly. Through franchising, a company invests very little capital or labor because the franchisee supplies both. The parent company experiences rapid growth with little financial risk. A company can also ensure it has competent and highly motivated owners and managers at each outlet through franchising. Since the owners are largely responsible for the success of their outlets, they will put in a strong and constant effort to make sure their businesses run smoothly and prosper.

In addition, companies are able to provide franchising rights to only qualified people. The franchisee also has numerous advantages that come from entering a franchising agreement, including:.

Buying a franchise business provides a higher chance for success. They get the benefit of owning a proven business formula that has been tested and shown to work well in other locations. In addition, they receive the support from the main company toward establishing the business, and the training to operate it successfully.

So they have a big advantage over starting a business from scratch, as they already have an established customer base. When you purchase a franchise, all the necessary groundwork has been done already.

In addition, the franchisee gets training and head office support from the franchisor; this may be essential if the franchisee is new to running a business and has no experience or business knowledge. In some cases of larger brands, they may have customers waiting for their doors to open for example in a new McDonalds. Your goal will be to grow from an established foundation and expand from there.

The franchisor offers a great deal of business experience that would take years for the average business person to acquire. Pizza Hut Franchise : Franchisees gain many benefits from being a franchisee rather than starting their own business from scratch.

They may be able to sell the franchise to someone else once they no longer wish to run it. Of course, no business arrangement is without potential risks and disadvantages.

While there are many advantages for the franchisor in entering a franchising agreement, some of the potential risks are:. Thus, there is a risk in allowing others not directly connected to the business to use the business name and trademark. This method of expansion can be slow. Thus, franchising is often an option open only to already wealthy businessmen.

Royalties are paid periodically during the life of the franchise agreement. Thus, support and marketing may not be adequately provided. Franchisees can only sell the products of the franchise, and they may be tied into a national brand with a strict set of instructions about how they should trade.

This may be difficult for someone with limited business skills just starting out. Closed shop : Franchisees face risks and disadvantages that may jeopardize their ability to stay open.

Franchise costs vary to some extent because of costs associated with different kinds of businesses and with different locations. On the other hand, start-up costs for a company like J. Home franchise operations have made franchising more accessible and affordable than ever, but still require knowledge and expertise.

One important factor leading to the record number of franchises in recent years is the proliferation of home based franchise opportunities. This has made franchising accessible to a wider group of people.

Previously, franchising a business meant that a franchisee would need to come up with a huge cash investment. This was mainly to cover the franchise payment and to establish a real store or business office, as directed by the business agreement. In some cases, this franchise fee is actually dwarfed in size by the cost of the volume needed for the business area.

Because of enormous charges in traditional franchise companies, very few people meet the expense needed to become franchise owners. With home based opportunities, you clear away the need to invest in a real business space by using your present home as a base of operations instead. In the United States, a franchise is a specific type of licensing arrangement defined by the Federal Trade Commission and also by several states.

In the United States a franchise generally exists when:. The definition of a franchise is not uniform in every state. Some states for example, may also include a marketing plan or community of interest provision in the definition.

Put another way, in a franchise a business the franchisor licenses its trade name the brand, such as BrightStar Care or Sport Clips and its operating methods its system of doing business to a person or group operating within a specific territory or location the franchisee , which agrees to operate its business according to the terms of a contract the franchising agreement. The franchisee is responsible for the day-to-day management of its independently owned business and benefits or risks loss based on his own performance and capabilities.

Investing in a franchise or becoming a franchisor can be a great opportunity. But before you select any franchise investment and sign any franchise agreement, do your homework, understand what the franchise system is offering and get the support of a qualified franchise lawyer.

Find out more about franchising by visiting our frequently asked questions page here. You can read more on franchising here and a beginners guide to franchising. Hiscox Business Insurance Tailor your policy from Hiscox to suit your business needs.

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Types of Franchises.



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