Introduction
This concept is much prevalent is today technological world. A franchise is a special kind of license that allows someone (the franchisee) to use a company’s special knowledge, ways of doing things, and brand name to sell a product or service. In this article, we will learn more about this concept.
Meaning of franchise
A franchise business is a way of selling products or services. It involves a company, called a franchisor, that owns the brand and business system. Franchiser is the original business whereby the owner licenses its operations along with its products, branding in exchange for a franchise fee. Another person or company, called a franchisee, pays to use the franchisor’s name and system. The franchisor gets a royalty and sometimes an upfront fee from the franchisee. This whole process is called franchising.
History of franchise
In the past, commercial franchising was a way for workers to start their own businesses with support from franchise owners. This happened in England and Europe, where the government gave land and permission to powerful people, like the church, to take care of it. As the economy became more global and people could travel anywhere, companies grew even more
Types Of Franchise
1. Job
This kind of setup is used for businesses that are brand new or very small. They usually start off with just a few things, like a little bit of equipment, not a lot of supplies, and sometimes a vehicle. Some examples of these kinds of businesses are travel agencies, coffee vans, lawn care services, plumbers, drain cleaners, and cleaning services for both homes and businesses.
2. Product
It is a type of business where a franchisee sells a franchisor’s products. The franchisee uses the franchisor’s brand name, but they are responsible for running their own business. This type of franch is most common for big products like cars, vending machines, and computers. Some examples of well-known product distribution franchises are Exxon, Texaco, GoodYear Tires, Ford, Chrysler, John Deere, and other car makers.
3. Business Format
It is a format in which a group of businesses work together under the same name for specified period of time. Each individual business pays a fee to use the name and get support from the main company. The main company provides training, marketing help, and other services to the businesses that are part of the franchise.
4. Investment
A type of business model where a franchisee invests a significant amount of money in a franchise such as a hotel. The franchisee will often not work in the franchise at all but will employ a professional management team to run the business.
5. Conversion
It is a way for franchise systems to grow by turning existing independent businesses in the same industry into franchise units. The businesses that convert to franchises use the same trademarks, marketing and advertising programs, training systems, and customer service standards as the franchise system
Conclusion
To conclude, franchising offers a unique opportunity for entrepreneurs to start a business with a proven concept and brand recognition. It provides a lower risk alternative to starting a business from scratch while still allowing for individual ownership and control. Overall, it can be a viable option for those looking to enter the world of business ownership.
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