Different types of franchise businesses

Franchising business is not a new concept in the industry. Franchise is the permission provided to the retailer by the owner for selling his goods and services under his brand name.

For example a company produces mineral water. It has its establishment in only one country and wants to expand. It can provide franchising opportunities to the other companies or individuals who want to start a business. The company would provide support, guidance and training to the individuals who want to start the business.

There are different types of franchise as follows:

  1. The Product Franchise. In this type of franchising, the manufacture uses the franchising agreement for determining how the product is distributed by the individual or company that is buying the franchise.

  2. The Manufacturing Franchise. Under a manufacturing franchise, the franchisee manufacturer has to make goods under the license of the franchiser and should sell them using the original trademark and name. The parent company of the product gets the franchise fee for every unit sold or some other agreed terms and conditions. Examples include the food and beverage industry.

  3. The Business Franchise Venture. The franchisee purchases and distributes the products for the franchise owner. There is a client base, which is provided by the product owner for the franchisee to maintain.

  4. A Business Format Franchise This is a proven business franchise model that uses a recognized product and brand. Franchisee has to pay a royalty fee. The well known fast food franchises are usually in such a format.