If you are looking for good information on what a franchise is and how it works, in addition to the most common types there are, I invite you to read the following publication and know everything about this types of franchising business. We detail the main types and what they consist of so that you have a clear idea of how they work.
The Franchises and Their Operation According to the Type
It is true that the way of doing business both inside and outside the Internet has evolved a lot and the types of franchising are not the exception, but also provide solutions for different needs of commercial association in these modern times where the market needs mark the pattern of the business world.
What Is and How Does a Franchise Work?
In a few words, we can say that a Franchise is a type of commercial contract between two independent businessmen, that is, a franchisor and a franchise. Through this partnership, the franchisor seeks to expand its brand and reduce structures and costs, while the franchise seeks to take advantage of an already recognized brand. It is a very common commercial association system since the franchise, in exchange for his investment and a percentage of the profits, will start a business with the brand already positioned, the image, the support, the portfolio of products or services, an infrastructure of business that brings a previous experience and knowledge that offers the franchisor that will never stop being a good advantage in the business world.
In business, not everything is to compete, but also create alliances, establish relationships in advantageous conditions for both parties, that is the great advantage of the franchise system that allows this type of relationship in which you do not compete, but you work under the name, experience, and all the support that a brand already known in the market can offer.
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What are the types of franchising that exist?
Basically, there are two types of franchises, but later we will see a set of names with which it is common to know them according to the type of commercial alliance that is made. In general terms, the types of franchises would be Franchise of the product or commercial brand and Franchise of business format.
- Product or trademark franchise: In the simplest form, the franchisor owns the rights to a name or trademark and sells these rights to the franchise.
- Business format franchise. The most complex way implies a wider relationship between the two parties. This model provides a wide range of services, including location selection, training, product supply, marketing plans and even assistance to obtain financing.
They are classified different types of franchising
Here the franchising company is the one that manufactures the products and is also the owner of the brand. Therefore, the brand that distributes and the manufacturer is the same. Clear examples of franchises of this type are Levi’s Center and Mango.
Franchise of distribution
The franchisor acts as a purchasing center, selecting and negotiating the best products and the most advantageous conditions with the suppliers. We can talk, in this case, the Intermarché Chain and Vobis Computer.
It is the most dynamic type of franchise with the most projection. The franchisor gives up the right to use and market an original formula or system of any type of service with a name already accredited and that has proven its effectiveness at the acceptance level. Examples are Bocatta and Pans & Company, Avis and Hertz, Novotel and Holliday Inn.
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It consists of two industrialists: the franchisor and the franchise. The manufacturer of the product gives the right to manufacture and market the product with its original brand. It requires a strong capital investment. Here the link is legal and economic, transferring technology, name, and brand of the product. The most famous examples are those of Coca-Cola, Yoplait, Royal Canin, etc.
It occurs when a traditional merchant accepts to allocate a part of their premises in an exclusive way to a certain brand, under the following rules: In the intended area there should only be products with the image and brand in question and there are a greater independence and lower demand by the franchisor.
This modality consists of exporting a franchise from one country of origin to another, through the figure of the master-franchisee, natural or legal person to whom the original franchisor sells the rights of its franchise to develop it in the Destination country. The master-franchisee is the manager and responsible for the development and representation of the franchisor exclusively in his country and will be responsible for selecting the franchisees and adapt the business to the specific characteristics of the country in which it is developed.