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What Is the Best Type of Franchising To Own

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It is essential to know the best franchising to own before deciding on buying a franchise. You should maximize your ability to succeed and mitigate the risk of losing your money. However, the best franchise to own for you may not be the best for other people, and vice versa. Your background, skills, interests, financial capabilities, location, and target population are some of the factors to consider. So, what is the best type of franchising to own? Continue reading to learn some of the best franchise options available. 

1. Product Franchise

Product Franchise allows the franchisee to distribute the products and some related services of a company. It is also called a Distribution Franchise. The franchisor provides the use of its branded trademark but not generally an entire system for business operations. Sometimes the franchise owner licenses its franchisees the rights for distribution and part of the manufacturing process. Product franchises are mostly large product dealers. 

Some examples include:

  • Cars and car repair parts (GMC, Ford, Goodyear Tires)
  • Large equipment (John Deere Tractor, Caterpillar)
  • Computers (Dell, Asus, Hewlett Packard)
  • Appliances (LG, Kenmore)
  • Beverage manufacturers (Coca-Cola, Pepsi)

2. Job Franchise

A Job Franchise is a low-investment franchise. It is often a home-based business that can be operated alone or with minimal personnel. The franchisee has to pay a franchise fee and minimal startup costs. Many industries can be franchised in this type, generally providing services.

Here are some examples of a job franchise:

3. Business Format Franchise

Business format franchising is the most widespread among the types of franchising. A franchisee under the business format operates their business under the franchisor’s brand. It also gets the entire proven system for marketing the products or services of the parent company.

The parent company provides a detailed plan, procedures, intensive training program, and support to new franchisees. Some examples are:

  • Fast food (Chick-Fil-A, McDonald’s, Subway, KFC, Wendy’s)
  • Restaurant (Olive Garden, Golden Corral, Longhorn)
  • Fitness (Gold’s Gym, Anytime Fitness)
  • Retail ( Abercrombie & Fitch, Bath & Body Works)

4. Investment Franchising

An investment franchise is predominantly a large-scale business that requires a considerable capital investment. The franchisee is a major investor who provides the money and management team. In other situations, the parent company encourages their franchisee to operate the business. Investment franchise is used primarily to produce a ROI with little personal involvement, as well as a possible capital gain on exit. 

The roles of the franchisees may also involve large-scale business tasks, like developing business strategy, assigning responsibilities, and marketing. How you run an investment franchise offers a lot of flexibility. You can be earning passive income, although in practice most investors in business franchises still maintain an involvement.

Overall, this type of franchise is the most attractive to those with management experience and those who want to start an extra income in semi-retirement.

Some examples of investment franchises are:

5. Conversion Franchise

Conversion franchising is the only hybrid type of franchising. It is a way of growing franchise systems wherein a franchisee enters into a partnership with an existing company. Once the relationship is established, they convert it into a franchise unit. To operate, the franchisee adopts the franchisor’s trademarks, marketing and advertising strategies, training and customer service procedures.

Conversion franchise enables existing companies to grow rapidly because the franchisee is not starting a new business location from scratch. The primary business and customer base are already in place. Any independent company that enters into a franchise relationship also benefits by gaining the strength of a famous, successful brand and all the support systems that come with it.

Examples of conversion franchising are popular among these sectors: 

  • Electricians
  • Florists
  • HVAC
  • Plumbing services
  • Professional service companies
  • Real-estate brokers

Conclusion

If you’ve reached this point, we are confident that you have already found the answer to the question “what is the best type of franchising. It may be hard to conclude that any one type of franchising is “the best” because it depends on several factors we have mentioned earlier. Each type of franchising has its pros and cons. The best choice for a business will depend on your unique circumstances and goals as an entrepreneur. It is essential for potential franchisors and franchisees to carefully consider their options and do their research before making a decision.

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