MOST COMMON FRANCHISE MODELS REVEALED

Alright, we admit it: While franchise speakers love to wax philosophical on business strategy, you don’t always need to tap a futurist trends expert or consultant to learn more about the space. In fact, if you wanted to pick up a few hints and insights, all you have to do is read the following post. A primer of sorts on some popular franchising models, as franchise speakers and futurists, we thought it might come in handy when it comes to doing your homework on the industry and so forth. We hope you enjoy it!

• Traditional Franchising – The franchisee pays an initial fee and ongoing royalties to the franchisor to use the company’s brand name, products, services, and business processes. According to franchise speakers, the franchisor provides training, support, and national advertising.
• Product Distribution – The franchisee purchases products from the franchisor and sells them directly to customers under the franchisor’s brand name. Common in beverages, snacks, automotive parts, etc.
• Business Format Franchising – The franchisee pays a fee to operate an entire business concept developed and licensed by the franchisor. Franchisor provides branding, systems, marketing plans, training, etc. Common in restaurants, hotels, fitness centers.
• Manufacturing Franchising – The franchisor licenses its trademarked brand to the franchisee but does not specify sources of supplies. As franchise speakers tell it, the franchisee manufactures and sells products locally under franchisor’s brand name.
• Conversion Franchising – An existing independent business converts to a franchise by partnering with a franchisor to use their branding and business systems. Provides built-in customer base for franchisor.
• Social Franchising – Applies franchising concepts to achieve social goals. Franchisor is often a non-profit offering franchisees a complete business model and brand to provide social services.
• Fractional Franchising – Franchisees purchase the rights to open one or multiple franchises in a given geographic territory. Allows franchisors to expand quickly.
• Area Development Franchising – A franchisee obtains the exclusive rights to open multiple franchise units in a territory within a specified period. Requires significant investment.

The main types cover product/service distribution, complete turnkey business formats, and geographic exclusivity models, or so we hear according to top franchise speakers  The model depends on the brand’s goals and capabilities.