When making a purchase it is always deliciously deluxe to have a wide range of options to pick and choose from, whether the goods on offer are wine, smartphones, or in our case: franchises.
For your convenience when browsing, Franchise Direct's website categorizes franchises by using a number of significant factors including industry, level of investment, and location (see the column on the left).
Structure is also an important element, and in the industry there are eight main forms of franchise from which you can pick or choose:
1. Single Unit Franchise
This is the type that most entrepreneurs who are new to the industry will invest in. The franchisee is responsible for managing only one franchise outlet, in one location, and they will handle all the daily operations there. Each individual unit has its own franchise agreement.
2. Multi-Unit Franchise
This is when a franchisee runs more than one outlet, within a specified territory. Such an act comes with increased responsibilities, and consequently the position is usually only granted to a franchisee who can prove that their single unit has been lucrative thus far. Their track record must show that they are capable of creating a network, one that will not threaten any other franchise units already established nearby. One advantage is that franchisors will usually offer discounts on start-up costs when the unit being purchased is not the franchisee's first. Plus greater responsibilities mean larger profits.
3. Master License
This is another method of expansion. A decent investment is made, and a master franchisee is granted the license to manage a specific and usually large region – such as a country. The master franchisee must play franchisor for this district by recruiting, training, and supporting the ordinary franchisees there, stepping in to help when something goes wrong in a unit. In return, they collect a sizeable portion of the fees that these ordinary franchisees pay to the franchisor.
4. Area Development
An area developer buys the exclusive rights to sell an agreed number of franchises in a defined geographical area within a certain amount of time. The agreement between developer and franchisor outlines where the units will be located and the responsibilities attached to setting each one up and selling it to a franchisee. While the franchisor will usually assist with factors such as marketing, it is still preferable for the area developer to have previous experience in supervising and franchise ownership.
5. Resale Franchise
A franchise unit is usually a long-term investment, but sadly it will have to be sold on eventually. This creates an opportunity for a new franchisee to buy a business that has already been established and can boast records of sales, costs and profit margins. Such details can be assessed and an educated decision can be made about purchasing. A resale often comes at a discount (although it can come with baggage too).
6. Part-Time Franchise
This is commonly defined as an operation where the franchisee works between 12 and 20 hours a week. Franchisees may choose this option for a number of reasons, including: to earn a supplementary income; because they want to spend time focusing on education or raising young children; because they travel often; because they wish to work at their own pace; or because rather than just jump straight into full-time franchising, they would prefer to approach the new setup over a longer period of time.
7. Home-Based Franchise
These are becoming more widespread as people realize that running a business from home can be just as efficient as doing it in an office. It has many advantages such as tax deductions, no rent to pay, and no commuting time, and it gives the franchisee more control over their own schedule. Self-discipline is required to balance the workload against one's personal life, to make sure that neither imposes on the other.
8. Business Opportunity
So technically this isn't a franchise, but it's pretty darn close and the two systems are often confused. Both are a chance to set up a business without having to start from scratch, by buying the rights to sell a product or service that someone else has already proven to be profitable. The difference with a business opportunity is that the buyer owns the business outright and can run it how they please, without having to follow any operations manual. Once the purchase is completed, and the training (if there is any) is finished, the relationship is over and support from the original seller is no longer provided.