Types of Franchise business (Part 2)
For people who are not familiar with the details of franchising, here are the four main types of franchise business:
1. The manufacturing franchise: Here, the franchisee is given the permission for manufacturing the products under license and sell them using the originator’s name and trademark. They get the advantage of the national advertising of the product they manufacture. The company that owns the product gets the franchise fee and sometimes a fee for every unit that is sold. For example: Beverage and food industry.
2. A Business Format Franchise: this type of business is very popular. Using a recognized product and brand, provides the franchisee a proven business model. For setting up the business, the franchise owner is provided with the training. The franchisee has to pay a royalty fee to the franchisor for purchasing the supplies. Most well known jewelers and fast food franchises are of this type.
3. The Product Franchise: The manufacturer uses the agreement to determine how the product is distributed by the person who buys the franchise. The manufacturer will get the income from the retailer and the retailer will get the benefit of the brand.
4. The Business Franchise Venture: the franchisee, here, buys and distributes the products for the franchise owner. To maintain the franchisee, the product owner provides a client base.
This is the most popular way to grow an already existing business which is successful and can also expand globally.