One of the most flexible forms of business is franchising. It helps you start your own business with an already prepared goodwill, product, and services. Through franchising, you need not worry about the external factors of continuing activity — all you need to work on how you can develop your business in the world of franchising. When you take up the brand name, goodwill, goods, and services of a particular firm, you become the franchisee of that firm. The firm becomes the franchisor, and the business is termed as franchising business.
Types of Franchising
Here we will discuss the types of franchising business. Through this, you can decide regarding what kind of franchising do you wish to do. This will help you start a franchising business according to your choices. Go through the article to know more about the types of franchising.
1. Job Franchising
The first on this list is the job franchising. This form of franchising will allow you to run a small scale business all by yourself with minimal investment to be made. To get started with job franchising, you need to buy a small amount of the company’s stock or equipment. The job franchising has a massive list of business opportunities such as plumbing services, commercial and domestic cleaning services, travel agency, real estate services, cell phone repair, and accessories, etc. Even corporate event planning, pool maintenance services, and shipping services are a part of job franchising.
2. Product or Distribution Franchising
Another form of franchising is the product or distribution franchising. This form of business is entirely driven by a product line of a particular firm. Here, you are the franchisee who needs to distribute and sell the product manufactured by the franchisor. This is an excellent business opportunity as you need not invest huge capital. Also, you are getting a readymade product to sell or distribute in the market, which reduces the stress of manufacturing your product. Product franchising generally deals with large products such as vehicles, factory machinery, computers, home appliances, bicycles, etc.
3. Investment Franchising
This form of franchising requires the right amount of investment. For example, if you take up a hotel franchise, restaurant franchise, medspa franchise, pathology center franchise, etc., you need to make the right amount of investment in it. Once you are done with the investment part, you can now work on the business with your management team or allow the franchisor to set up a management team for you. The franchisor can also operate the company, and whatever revenue is produced will be shared in the agreed ratio.
4. Conversion Franchising
This is a new form of franchising where if you have an independent business, but you are struggling to continue or expand your business, you can opt for conversion franchising. Conversion franchising takes up independent small businesses and transforms them into franchise units. You get to adopt their trademark, goodwill, advertising and marketing program, training system, and client service procedures. Conversion franchising franchisors are the potential business model with a high growth rate.
5. Business Franchising
This form of franchising is the most effective and pure form of business. Here the franchisor provides the franchisee with all the details on how to conduct business. From commencing the business to selling, distributing, and marketing the products, everything is directed by the franchisor. This, in turn, reduces the workload on the franchisee. You get proper support and training facilities for conducting business procedures as a franchisee. Due to this reason, it is the most popular form of franchising business.
Advantages of Franchising
- Franchising is the simplest and easiest way to start a business. There are minimal chances of incurring losses at the initial days of the company. This, in turn, boosts the confidence of the franchisee to continue the business.
- You don’t have to conduct market researches for product acceptance. Further, you need not worry about product testing, as well. The entire pile of product marketing is on the franchisor. You need to sell or distribute the product.
- As a franchisee, it is your right or privilege to set up a franchise in a given area.
- There are better prospects of getting loans from the bank for expansion of franchising business or for setting up a new franchise.
Disadvantages of Franchising
- You can enjoy the goodwill of the firm or the franchisor, but it isn’t your goodwill. The goodwill is with you till the time you are a franchisee of the company.
- The business is non-transferable and cannot be sold to any person. You cannot make decisions regarding the company on your own.
- Franchisees are restricted to one product line and services of the particular franchise. This, in turn, limits the franchisee to move out of the specific region and expand the business.
Now that you know all the types, benefits, and drawbacks of franchising, you’d want to give it a try.