Know More About The Different Types of Franchising

Know More About The Different Types of Franchise
Know More About The Different Types of Franchise

In today’s business era, where more than 40 percent of the employable population prefers owning a business, franchising is the best-suited option. That is mostly because the brand is already established and comes with its own marketing strategies. The Franchisors require distribution support, which engages franchises. In the majority of the establishing franchises, the methods, the brand owners, and all the procedures of the parent brand are adopted by the franchises. Here are the different types of franchising one can opt for:

  1. Business Format Franchise
  2. Product Distribution Franchise
  3. Management Franchise
  • Business Format Franchise:

A Business Format Franchise is where all facets of the business are replicated at all the franchise locations. Here the parent brand is responsible for the brand building. All the major decisions for the brand are made by the parent brand and the administrators. Fast-food chains like Mcdonald’s, KFC, Pizza Hut, etc would come under this umbrella. The food and beverages made across the various locations are cloned. It would be right to say that the various locations of a franchise use the trademark of the parent brand. To give an example, the crispy-fired chicken from KFC has the same taste, texture, and quality around the globe. Obviously, location does have an effect on the ingredients used, like chicken meat replacing beef in countries where eating beef is taboo. Altogether, branding, marketing, and strategies have a common baseline.

  • Product Distribution Franchise:

When the franchisors cannot reach all projected locations, they rely on the franchises to take care of the distribution. The role of a product distribution franchise is different from that of retailers and distributors. In regards to the product distribution franchise, the franchisee pays a definite amount of money to the franchisor to use the trademark of the parent brand and to distribute products. Here the franchisor does not have absolute control over the franchisee as they do in Business Format Franchise. The franchisees are responsible for the product distribution among the local retailers and distributors, while the franchisors only focus on the quantity and the quality of the produce.

Coca-Cola is one of such brands that offer Product Distribution type Franchises. Coca-Cola has dominance over the product quality and quantity, but it has some franchisees who have paid Coca-Cola to get hold of the distribution in the nearby areas. This way the company doesn’t have to be concerned about the distribution, but just production.

  • Management Franchise

In this type of franchising, all the management-level decisions are taken by the franchisee while the franchisor is responsible for the operations. To understand this type of franchising better, one can look into the operations of FedEx. FedEx is a globally acclimatized delivery service that strives for its accuracy. The supply chain of FedEx works tremendously well. The franchises take up the responsibility of collecting the articles, recording the addresses, and being the first point of contact with their patrons. The further stages of the commute of the articles are covered by the management of FedEx.

Hereafter, it’s comprehensible that in the case of Management Franchise, the franchisors handle the major operations of the business while the franchisees help in the smaller operations. This is one of the most challenging forms of franchises. This type of franchise model requires the franchisees to have outstanding people management skills. Also, this type of franchising calls for the franchisors to take responsibility for the overall business development and increase the business to the parent brand.

The above are all the different types of franchising that exist in the market. The classification has made it easier for the franchisees to choose which franchise model they want to be a part of, and which franchise model gives them the most output in terms of business. However, these different types of franchises can exist in combination as well.

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