Franchise Model: What you Should Explore before Investing!

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Almost any business can be franchised thanks to the relative adaptability of the franchising model. Different characteristics, such as the quantity of investment, the franchisor’s philosophy, administration, marketing, and partnership models, can be used to categorize franchises. Job, product, business model, investment, and conversion franchises are the five key franchises.

Conversion Type Franchise

Conversion franchising modifies traditional franchises. Many franchise systems grow through franchising similar independent firms. Franchisees adopt trademarks, marketing, advertising, training, and client service standards. They reduce procurement costs. This approach offers the franchisor rapid unit and royalty fee development. Real estate agents, florists, professional services organizations, and residential services like plumbing, electricians, and air conditioning use conversion franchising frequently.

Licensed or Business Format Franchise System

Business structure Franchisee can utilize the franchisor’s trademark, but more crucially, it gets the whole business and marketing system. The franchisor provides a clear business strategy, procedures, initial and ongoing training, and assistance. Business format franchising is the most prevalent franchise scheme. Fast food, retail, restaurants, business services, fitness, and other industries are popular franchises.

Home-Based Low Investment Franchise Model

A person who wishes to start and run a small franchise alone usually buys a home-based or low-investment franchise. The franchisee usually needs little equipment, limited stock, and a car. This group includes travel agencies, coffee vans, lawn care services, plumbing, drain cleaning, commercial and residential cleaning, cell phone accessories and repair, real estate services, shipping, pool maintenance, corporate event planning, children’s services, etc.

Product or Distribution Franchise Model

The franchisee sells the franchisor’s products in product-driven franchises. The franchisor licenses its brand but doesn’t usually supply a business system. Product franchises deal with huge products like vehicles and car parts, vending machines, computers, bicycles, appliances, etc. Distribution franchising accounts for most retail sales. Exxon, Texaco, Goodyear Tires, Ford, Chrysler, John Deere and other automakers have distribution franchises. Coca-Cola and Pepsi license distribution and production, for example.

Capital Intensive Investment Franchise

Hotel and restaurant projects that demand substantial capital expenditure are typical examples of this endeavor. Franchisees often make an initial financial investment and then enlist the help of either their in-house management team or the franchisor to run the firm and earn a profit on their original investment and any subsequent capital gains.