Definition And Types Of Franchises

Generally franchising refers to a specific way of running a business. Broadly speaking franchising is a business strategy and an efficient marketing tool for all companies when they plan to make an expansion of their market share not only in a quick manner but also in a cost-effective way but it is worth using tools such as a redundancy calculator before you make any decisions about leaving your job to run a franchise.

 

 

Before you make a decision on planning on running a a franchise and planning to work from home, make sure that not all companies which seem to be franchises are real franchises at all and the companies own and operate all stores themselves. Here one thing should be noted that three fundamental types of franchises are available in today’s business world.

 

 

One is distributorships. This type of franchise allows the franchisee to sell the product or products of their parent company. For example, we can look at the auto dealerships of various car brands such as Toyota, Ford, Lexus and Mercedes. Another is trademark or licensing of brand name. This franchise allows the licensees to use the trademarks or brands of their parent companies in association with their own business operation.  Beverages and sport franchises are the good examples of such franchise type. The most popular and familiar type of franchises is business format franchises. Franchisors that follow business format give their franchisees the license or legal right to sell its goods or services and even to use its business techniques where necessary. Usually the franchisees have to pay an initial fee to gain the right to sell goods or to use the franchisors’ business model. After that they have to pay a percentage of the gross sales to the franchisor as long as long the term of their franchise contract exists.

Share and Enjoy:
  • Print
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google Bookmarks
  • Blogplay