Franchise Types: What are the Main Categories?

Franchising is a popular business model that offers individuals the opportunity to own and operate their own business under the umbrella of an established brand. When it comes to franchises, there are generally two main categories that define the type of support and services provided to franchisees.

Business-Format Franchises:

Business-format franchises, like McDonald's, offer not only the products or services but also provide a proven business model, training, and ongoing support to the franchisee. The franchisor typically assists with site selection, store design, marketing strategies, operational procedures, and training programs. This type of franchise offers a comprehensive system for running a successful business, with the franchisee following a set of guidelines and standards set by the franchisor.

Product-Distribution Franchises:

On the other hand, product-distribution franchises focus primarily on the distribution and sale of specific products from the franchisor. These franchises do not offer as extensive operational support as business-format franchises. Instead, the focus is on distributing the products to the market through a network of franchisees. This type of franchise operates more like a traditional supplier-dealer relationship, where the franchisee's main responsibility is to distribute the products in a specified territory.

In conclusion, the two main types of franchises, business-format, and product-distribution franchises, cater to different business models and operational structures. While business-format franchises provide a comprehensive system with extensive support, product-distribution franchises focus on the distribution of specific products with less operational guidance.