Types of Franchises
The five major types of franchises are:
- Job franchise
- Product franchise
- Business format franchise
- Investment franchise
- Conversion franchise
Business Format Franchise
The business format franchise is the model that will spring to most people’s minds when they think of franchising. The franchisor provides the franchisee with everything needed in order to set up and operate the business.
Product Distribution and Business Format Franchising
The most common forms of franchising are product distribution and business format.
A business format franchise involves the franchisor providing a full business model for the franchisee to follow, including branding, marketing plans, operating procedures, training, site location assistance, and ongoing support.
Franchise Arrangements
Within these two main types of franchises, there are several common franchise arrangements:
- Single-unit franchising
- Multi-unit franchising
- Area development franchise
- Master franchise
In summary, product distribution and business format franchises are the two primary forms of franchising, with single-unit agreements being the most basic franchise arrangement. The ability for franchisors to grow through multi-unit, area development, and master franchising enables rapid geographic expansion.