The beauty of franchising lies in its ability to offer people a sturdy, time-tested, and effective system of operations. It allows the franchisor to expand its business and brand rapidly. It also offers franchisees to have a higher rate of success compared to a sole proprietorship. But before joining the franchise bandwagon, you need to understand the difference among the various types of franchises for sale in the market first.
Business Format Franchise
In this franchise setup, the franchisee purchases rights to fully manage a franchisor’s store. This means that aside from the right to manufacture and distribute the franchisor’s products and services, you also have the right to use the franchisor’s business operation models, strategies, and techniques which have been tested and proven to work.
In a product franchise, you purchase rights to distribute or sell the products supplied by a manufacturer. The franchisor will only supply you the goods, and you’re on your own in finding ways to sell it. For instance, if an auto repair shop wants to sell tires to augment its revenues, it may need to purchase a product franchise from a tire manufacturer first before it’s allowed to carry tires.
In contrast with a product franchise, a manufacturer franchise allows you to produce and supply a franchisor’s product. This is one of the lesser-known types of franchises for sale that mainly focuses on the manufacturing side of a product. There are, however, a few manufacturer franchise setups that also allow the franchisee to sell the products the former makes.
Types of franchise can also be categorized by ownership. A single-unit franchise, as the name suggests, allows you to have the rights to manage and operate one franchise unit. It is one of the most common franchise models that is popular among newcomers to the franchising domain. In many cases, those who are successful in their single-unit franchises eventually end up buying more stores.
Area Development Franchise
Area development franchises allow you to operate all franchise units in one location instead of simply one unit in one location. This type of franchise is generally for experienced franchisees that are able to manage multiple franchise units at once. Area development franchises usually contain stipulations that require the franchise to develop its chosen area within a certain period (typically 5 years). For more information, go to smallbusiness.chron.com.
Understanding the Different Types of Franchises for Sale