Various Types of Franchise Businesses

Rishabh Sharma
Rishabh Sharma Jan 13 2021 - 3 min read
Various Types of Franchise Businesses
Jumping into a franchise business is a great way to become an owner of a small business. There are 5 major types of franchises that you can choose from. They all vary in terms of your position, your input into the business, and the amount of involvement of the franchisor. Read on to know more...

Franchising is a flexible and easy method to grow your business and any type of business can be franchised. There are many types of franchises business available, that can be differentiated according to various factors, such as investment levels, franchisor’s strategies, operations, marketing, and relationship models, and many more. But there are five major types of franchises which are mentioned below:

1. Job-Franchise-

Generally, this is a home-based or you can say a low-cost franchise that is handled by a person who wants to start a small franchised business alone. These franchisees are mostly operated by a single person selling products or providing a service within a specific trade or industry. The franchisee usually has to buy minimal equipment, limited stock, and sometimes a vehicle to provide the services to the customers. A wide range of services comes into this sector, like travel agency franchise, coffee van, garden care service, drain cleaning, commercial and domestic cleaning, cell phone accessories and repair, real estate service, shipping service, event planning, daycare services, so on.

2. Product Franchise-

These are product-driven franchises and they are totally based on supplier-dealer relationships, where the franchisee distributes the franchisor’s products and services. The franchisor licenses its brand name by not providing franchisees an entire system for running their business. These types of franchises generally deal with large products such as car spare parts, appliances, vending machines, etc. Product franchising offers the highest percentage of total retail sales. 

3. Business Format Franchise-

These types of franchises also use the franchisor’s trademark and the entire system to operate the business and market the product and/or service. The franchisor offers a detailed agreement and procedures on almost every aspect of the business model. It also includes initial and ongoing training and support. These are the most popular sort of franchise system. Businesses from more than 70 industries can be franchised, and the most popular are fast food, retail, restaurant, business services, fitness, and others.

4. Investment Franchise-

These are large-scale franchise which requires a huge capital investment, such as hotels and big restaurants businesses. The franchisees usually invest money and engage either their own management team or franchisor to operate the business and produce a return on their investment and capital gain on exit.

5. Conversion Franchise-

It is a modified relationship between the franchisee and franchisor, where many franchise models grow by turning their businesses into a trademark. The business grows in the same industry into franchise units. The business adopts marketing & advertising programs, training system, and client service standards. They also usually increase procurement savings. The franchisor in this way has the potential for very rapid growth in terms of units and royalty fee income. Examples of industries that extensively use the conversion franchising methods are real-estate brokers, professional services companies, home-services, like electricians, air conditioning, and so on.

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