Franchising can be a life-altering investment, so it’s important to do your homework before you decide to take the leap. Upon researching franchising, you’ll find that there are many types of franchising out there, as well as opportunities that are similar to a franchise investment. The fun (and the challenge) lies in figuring out what kind of franchise is best suited for you and your goals. Here are a few examples of the different types of franchising, as well as the difference between franchising and other investments.
There are plenty of affordable, low-cost franchise ownership opportunities up for consideration. If you’re researching franchises with a low investment, start with job franchises! This type of franchising is often home-based and requires much less overhead, as well as minimal staffing. Examples include a cleaning service franchise, event or travel planning and electronic repair.
Product-driven franchises exist mainly under a parent company and involve supplier-dealer relationships – franchisees distribute the franchisor’s products and services. The parent company provides the franchisee use of its branded trademark, name and logo, but this is not to be confused with licensing. With franchising, you get to leverage the brand’s name, but your investment also provides access to robust support systems that the franchisor has in place. Two examples of product franchises are car repair franchises and vending machines.
When you hear the word “franchise,” it’s likely that a business franchise is the first to come to mind. Fast food, restaurants, gyms, retail, you name it – we frequent different types of franchising specifically within the business sector each and every day. Franchisees under a business format also operate and market products or services under the parent company’s brand, while receiving access to the proven processes and systems that the franchisor has likely perfected over many years.
Franchise vs Chain
It’s common for people to confuse franchises with chains, and vice-versa – especially when we tend to think of fast-food and restaurants first. Simply put, a chain is a business where the parent company owns all of the locations. A franchise involves locations or branches that are owned by seperate individuals (the franchisees), who are in charge of running them. In some cases there will also be corporately-owned locations under a franchise brand, but the main difference lies in involving individual owners.
Licensing vs Franchising
One of the biggest benefits of going into business for yourself, not by yourself, is the extensive training and support you receive – from site selection to onboarding, training, marketing and everything in between. Therein lies one of the biggest differences between licensing vs franchising. A franchisor provides franchisees with the know-how to run their operation according to the business model, while paying for a license provides an individual with the ability to use their name and intellectual property, without the carefully tailored training and support or specific operations procedures to back the venture.
Clearly, there are as many different business opportunities out there as there are interests. If you’ve been bitten by the entrepreneurial bug, it all boils down to understanding your goals, objectives and what kind of opportunity will best help you achieve them. Familiarizing yourself with the different types of franchising is a great way to start aligning with what you need and want to pursue to be the most successful.