The franchise business model is a viable choice for both the franchisors and franchisees, rendering cost-effective brand expansion and economic growth by generating employment. Thus, franchising is undeniably a flexible approach, wherein each type of franchise solution can function differently.
Such franchising possibilities can be segregated according to the involved determinants such as franchisee involvement, business strategy, functional support, funding, marketing, and promotional costs. In this context, nowadays typically three types of franchise business models are utilized to enhance the brand’s expansion in the market, which are the business format franchise solution, the manufacturing franchise, and the product-distribution franchise model.
How Does The Franchise Solution Help To Choose The Flexible Franchise Model?
The concept of adaptable business ownership helps in delivering a perfect work-life balance for the franchisors and franchisees. The startups and new franchise owners will no doubt save their valuable time, money, and endeavors with the distinct different franchise business models. Aspiring entrepreneurs can always look to start small franchise businesses or the standard brick-and-mortar franchise business models.
Nevertheless, before initiating any franchise business, it is always prudent to justify the level of financial responsibility that the franchisors can offer. Thus, franchising is a versatile business model, where viably any type of business can successfully thrive and be franchised. Not to mention, factors like investment level, the franchisor’s strategy for marketing and operations, along with relationship types should be considered to bring forth an adaptable franchise model.
Some Discrete Franchise Business Models:
Home-Based Model
With the advent of cutting-edge technology, the franchise business environment has undergone drastic changes. The home-based businesses are the latest trend in the franchising realm. Franchisee owners can run their businesses from remote locations or at home. Such businesses entail professional and industrial services such as digital marketing services, consulting, accounting, and more.
This home-centric franchise model comes with distinct mileages, like functioning from the comfort of home and having lower operating costs. Thus, with low overheads, the franchisee owners never have to worry about paying rentals, or other utility costs. Besides, with no lease agreements, and no requirement to install fittings, or restructure the business space, such a home-based franchise business model is simpler to start.
With such operating conveniences, the franchisor can easily achieve customer satisfaction, as the requirements of the end consumers are properly and promptly met. Nevertheless, starting and operating such a home-based franchise model needs different skill sets of the franchisors, such as appropriate time management, which can be accomplished by designing a synchronized work schedule and adhering to the same.
Brick-And-Mortar Model
Now, the brick-and-mortar business model denotes free-standing premises and in-line stores in a mall, whereby such businesses come with a standard location of operation. Nowadays, most franchisees function in this model. Thus, if the franchisee owners plan to operate a brick-and-mortar franchise, they should possibly be operating the food and eatery services, retail chains, and business services.
One of the vital premiums gained from this business model is the substantial number of walk-in traffic that such franchises will attract. Nevertheless, such a franchise model is based on considerable capital investment, where the franchisors first need to find the building to start the business. This involves a lot of planning at the primary stage, whereby the location to set up such a franchise needs to be ensured.
Thus, for the success of such a business, the location advantage is critical, wherein centrally located franchisee outlets will no doubt draw an increased number of walk-in customers. Moreover, the franchisors should engage in extensive research about the functioning of similar franchises, thereby obtaining deep insights to run the business properly, along with knowledge about possible business expectations.
Manufacturing Model
Such franchise business models are specifically for the production industry, wherein the franchisors are typically manufacturing enterprises offering exclusive rights to the franchisee or dealers to manufacture and supply the products in a well-established location. Examples can be Thums Up and Coca-Cola for this particular type of franchise segment.
Product Distribution Model
Such a franchise business model is one of the oldest techniques of franchising, in which case the franchisees have the right to supply the products rendered by the manufacturers. For utilizing the copyrighted products of the manufacturers or franchisors, the franchisees should make payments. In this franchise business model, the franchise owners do not extend constant support to the franchisees, such as in the business format franchisee models. Thus, this product distribution franchise model is extremely popular in the automobile and manufacturing industries, delivering unprecedented business development.
Business Format Model
Under this unique business format franchise model, the relationship between the franchisor and franchisee is robust in comparison to other business models. In this context, the layout is more beneficial, especially for the franchisee, as it offers an extensive range of services from the franchisor’s end. The franchisee delivers training, marketing, production, operations, strategic planning, and quality control from the franchisors with extensive support and guidance. Such an innovative business model comes with all-inclusive assistance from the franchise solution for recruiting the manpower, along with scheduling and organizing regular advertising pursuits at the regional level.
Mobile Business Model
Such mobile business franchisees typically operate from a van, truck, or car on the road, helping the franchisors not interested to operate from a store or office. Similar to the home-based model, this franchisee business comes with increased flexibility with the functioning schedules. However, such mobile businesses never have distinct mileages, just like mall-based stores, whereby tactical marketing approaches need to be introduced as potential customer acquisition strategies. Some of such unique mobile franchisee models can be pet grooming, business maintenance solutions, and personal fitness services.
Buzzing Franchise Models (COCO, COFO, FOCO, and FOFO)
Apart from the aforementioned franchise models, some other happening business models are COCO – Company Owned Company Operated, where the franchise store is owned by the brand and is operated by the brand, like Bigbazar, which is entirely funded by the company. Besides, there is COFO – Company Owned Franchise Operated, whereby a company invests in the franchise business, and the franchisee functions as per the company’s regulations.
Again, there is FOCO – Franchise Owned Company Operated, also called the Franchise Invested Company Operated, whereby the franchisee owns the premises, and is accountable for all surplus capital expenses. Eventually, there is FOFO – Franchise Owned Franchise Operated, whereupon the enterprise provides the franchise investor its specific brand name. The brands determine all the prices of the products at the franchise outlet. In this context, the franchisee maintains all the operational expenses, and they need to pay the brand a percentage of sales proceeds as a royalty.
In A Nutshell
It is certainly that franchising ensures that the task of initiating the business is quite simpler, but at the same time, it is vital to accept that all the different types of franchise business models are legal business contracts. Hence, both the parties, i.e. franchisor and franchisee are required to adhere to the agreement terms and protocols rigorously for the overall success of the franchise business.
BrandWide, in this context, is the cloud-based all-in-one franchise solution to assist the franchisors and franchisees with overall integration with the entire franchise network, while simplifying the adaptability with the aforementioned franchise business models.
