The Franchise Business Model: How to Find the Right Franchise for You
The franchise business model is a powerful strategy that allows individuals to own and operate a business using the branding, products, and services of an established company. It's a symbiotic relationship where both the franchisor and franchisee benefit.
If you’re considering investing in a franchise, you may already have an idea of what kind of business you want to open. Do you see yourself running a fast-food restaurant or a cleaning service? Or maybe a car dealership or gas station? Perhaps you’d rather sell a specific product like soft drinks? Maybe you’re already a business owner who imagines their business as part of a chain.
The world of franchising is so broad, it includes those examples and many more. All franchises are set up according to one of four different business models: business format franchise, product distribution franchise, manufacturing franchise, or conversion franchise. Understanding the nuances of each type will help you find the franchise that suits you best.
The Four Types of Franchise Business Models
The franchise model people are most familiar with is the business format franchise. In this model, the franchisor provides a full-fledged business strategy — including everything from operational procedures, and marketing strategies, to training programs and ongoing support. Examples include fast food restaurants like Burger King and residential cleaning companies like Two Maids.
The product distribution franchise model is reminiscent of a supplier-dealer relationship. The franchisor manufactures a product, and the franchisee takes on the role of distributing or selling it.
Car dealerships and gas stations typically fall under the product distribution franchise model. For example, if you sign an agreement with Ford, your car lot will sell automobiles manufactured by the Ford Motor Company. If you run a Shell station, the gasoline will come from Shell plc.
The third model is the manufacturing franchise. The franchisor grants the franchisee the right to produce and sell goods using its brand name and trademark. The franchisor provides strict guidelines and processes to ensure that the products made by the franchisee meet their standards.
One of the most famous examples of this is Coca-Cola. Franchisees use Coke’s proprietary ingredients and processes to produce the soft drink, which is then distributed and sold in a designated territory. This type of franchise typically requires a significant investment and is less common than other models.
The fourth type of franchise model is the conversion franchise. In this model, existing businesses transition into a franchise brand. Imagine an independent hardware store or a local real estate agency becoming part of a larger, nationally recognized chain like Ace Hardware or Century 21 Real Estate. This model offers businesses a chance to leverage established brand power while maintaining some of their original identity.
Comparing Different Franchise Models
Entrepreneurs who want to open a franchise need to weigh several key factors to find the franchise business model best for them. For instance, if you're seeking a flexible schedule, a home-based, business format franchise could be the perfect fit.
The financial aspect is equally critical; different franchise models come with varying financial commitments. You need a clear understanding of the initial investment, ongoing fees, and the potential return on investment to ensure it fits your budget.
Consider the amount of training and support offered by the franchisor. A comprehensive training program and unwavering support can be the difference between a flourishing and a floundering business.
You also need to investigate the demand for the franchise's offerings in your target area and consider the level of competition. This will help you gauge the viability of the franchise and avoid oversaturated markets.
Consider Franchising with Concrete Craft
Concrete Craft distinguishes itself in the franchise landscape with a business model that zeroes in on the specialized segment of decorative concrete. By carving out a niche for franchisees, we effectively minimize direct competition and establish them as leaders in a distinct market.
Concrete Craft’s franchisees receive extensive instruction in industry practices, decorative concrete techniques, and the essentials of running a business, ensuring all our franchisees are experts in the industry. We also provide a robust support system that covers everything from marketing to day-to-day operations.
Get Started with Concrete Craft Today
Inquire now if you’ve determined that the right franchise model for you is the business format model,. One of our franchise consultants will be in touch to answer your questions, so you can see if owning a Concrete Craft aligns with your personal goals and interests and get you started on the path to franchise ownership.