There are five main types of franchising. In fact, every business type can be franchised, however, the five categories are established based on factors like the franchisor’s strategy or the marketing model.

Franchising is an easy method to gain more brand recognition and promotes sales of goods or services. The five types of franchise are product franchise, job franchise, conversion franchise, business franchise, and investment franchise.

Product franchise is also known as distribution franchise, and it is probably the most popular form of this strategy. These franchises are based on a dealer and supplier relationship and deal with large items such as cars, appliances, bicycles, and other machines.

In these types of franchises, the franchisor sells its trademark without providing a system on how to manage the business. It is up to the franchisee to come up with a framework on how to make the new business work.

Some examples of product franchises include Ford, Chrysler, Pepsi, and Coca-Cola. In the case of the fizzy drinks, the franchisor has also licensed the manufacturing process on top of distribution. This method gives the franchisee more flexibility but also more responsibility for the growth of the new business.

Job franchise is a low investment franchise, quite different from the previous one. With job franchises, the franchisor sells the trademark of the company while the franchisee needs to buy equipment to provide all the necessary services described by the job. This type of franchise can be seen in the real estate industry, shipping services, or home renovation services such as lawn care or pool cleaning.

The conversion franchise is a little bit more complicated than the rest. It means converting independent businesses into franchises that adopt franchise standards which include the trademark of the business, the training system, advertising programs, and marketing strategies. These franchises give new investors rapid growth. This type of franchising can be seen in floral shops, plumbers, or electricians.

A business franchise includes not only the trademark of the franchisor but also the business model and operational framework. The franchisee is given a detailed plan on how the business works which makes this type of franchise very attractive. This type of franchise is popular in the fitness industry, retail service, and more.

Investment franchises include large-scale projects like hotels that need a big investment. A large sum of money is put into these franchises and therefore there is more flexibility with the management team which can be either from the franchisor or the franchisee.

For more information on franchises and how to meet franchise standards read our blog or contact our team at Zero HMT hospitality management solutions.