Different types of franchising

Franchising is a straight forward concept which involves the franchisee benefitting from an established franchisor’s reputation, business methods and support in exchange for fees and royalties paid to them. But there are two different types of franchising which are important to understand.

Business format franchising involves the franchisee selling goods and services which live up to standards set by the franchisor. Using this method, the franchisor will have a lot of influence over the franchisee’s method of operation. Another factor with this model is that the franchisee will be required to make a payment to the franchisor before or within six months of the business opening.

The other method of franchising is called the product and trade name franchising model. Royalty fees do not feature in this model. Here, the most important factor is that the product is supplied by the franchisor and these are sold by the franchisee. With this model, the franchisor helps the franchisee to secure accounts and in return the franchisee must make a payment to the franchisor within six months of the business opening.

But no matter which type of franchising you choose, it will involve dedication and hard work in order for it to be a success.