By Palesa Ndinisa
According to an article International Franchise Association (IFA) published on Google, franchise is a business agreement where a company (in this instance, a franchisor) grants another business (a franchisee) the right to operate under their brand, using their name, trademarks and business methods in exchange for a fee. Essentially, it’s a way for established businesses to expand by allowing individuals or other businesses to open and run their own locations of the franchise, under the franchisor’s direction and branding.
Different Types of Franchises
Franchise types are generally categorised as either Business Format Franchises (BFFs) or Product Distribution Franchises (PDF). Within these broad categories, there are various sub-types, such as Multi-Unit Franchises, Area Development Franchises, and Master Franchises, which deal with how the franchise rights are structured.Additionally, there are specialised franchises like Job Franchises and Manufacturing Franchises, which offer unique ownership models.
BFF Franchise
Business Format Franchises involve selling a complete business system, including branding, operations, and support, ensuring consistency across multiple locations. This is the most common type, seen in industries like fast food, retail, and business services.
Product Distribution Franchises focus on distributing the franchisor’s products, often seen in sectors like beverages, consumer goods, and automotive parts.
Here’s a more detailed breakdown:
● Types of Business Format Franchises:
● Multi-Unit Franchises: Franchisees operate multiple locations under the same brand.
● Area Development Franchises:Franchisees develop and operate multiple locations within a specific geographic area.
● Master Franchises: Franchisees gain the right to develop and operate the franchise within a larger territory, often internationally, and then sub-license to further franchisees.
● Product Distribution Franchises:
● Product Franchise: Focuses on the distribution of a specific product under the franchisor’s brand.
● Manufacturing Franchise: The franchisor manufactures the product, and the franchisee distributes it.
● Other Franchise Types:
● Job Franchise: The franchisee provides a specific service or role, often with lower investment and more flexibility.
● Management Franchise: The franchisee manages the operation rather than directly providing the service or product.
● Conversion Franchise: The franchisor converts an existing independent business into part of the franchise network.
● Investment Franchise: The franchisee invests in the business and manages it, often with significant capital requirements.
