| The Franchising Business is probably not something | | | | gets the benefit of the brand and experience of the |
| new for you. You've probably heard about food and | | | | franchisor. |
| clothing establishments being franchised. But for those | | | | 2. The Manufacturing Franchise. |
| who do not have a clue, a franchise is a permission | | | | The franchisee is permitted to manufacture the |
| that is provided by the manufacturer or the owner to | | | | products under license and sell them using the |
| retailers or distributors to sell the manufacturers' or | | | | originator's trademark and name. They also get the |
| owners' products and or services. | | | | benefit of the national advertising of the product they |
| Take for example Restaurant X who specializes in | | | | manufacture. The company owning the product gets |
| fried chicken. Restaurant X has established its name all | | | | the franchise fee and sometimes a fee for every unit |
| over one country. Now, it wants to expand by | | | | sold. Examples include the food and beverage industry. |
| providing franchising opportunities to smaller companies | | | | 3. The Business Franchise Venture. |
| or individuals looking for a business to start. So if | | | | The franchisee purchases and distributes the products |
| Individual Y wants to have a restaurant that serves | | | | for the franchise owner. A client base is provided by |
| fried chicken, he or she may opt to just get a franchise | | | | the product owner for the franchisee to maintain. |
| of Restaurant X. If it approves, the Individual Y can | | | | Vending machines are a classic example of this, |
| open up a Restaurant X of his or her own, using the | | | | where the franchisee purchases the vending machines |
| brand, under the terms provided by the franchisor. | | | | and distributes and services them, taking their share of |
| Restaurant X will provide training, support and guidance | | | | the takings of the machines. |
| to help Individual Y start the business. | | | | 4. A Business Format Franchise |
| Now that you have an idea of what franchising | | | | This opportunity is very popular, and involves providing |
| means, let's begin to learn about the different types of | | | | the franchisee a proven business model using a |
| franchise businesses. For those who are not familiar | | | | recognized product and brand. Training is provided by |
| with the details of franchising, there are four types of | | | | the franchise owner and assistance in setting up the |
| such business: | | | | business. Supplies are purchased from the franchisor |
| 1. The Product Franchise. | | | | and the franchisee pays a royalty fee. Frequently the |
| With this the manufacturer uses the franchise | | | | franchisor will sell the franchisee the products or raw |
| agreement to determine how the product is distributed | | | | materials to provide the same quality of product. Most |
| by the person buying the franchise. A retail company | | | | well known fast food franchises are of this type, and |
| can be provided with a franchise to distribute, for | | | | also many jewelers and other ubiquitous High Street |
| example, a range of tyres. The franchisee can utilize | | | | names. |
| the brand name and the trademark owned by the | | | | Franchising is a very popular way that many use to |
| manufacturer to distribute or sell the car tyres. The | | | | grow their already successful businesses, and a few |
| owner of the store will pay the manufacturer a | | | | end up going global. You need to get the right product |
| franchising fee or agree to purchase a minimum | | | | and the right business in the right area, but if you |
| inventory to sell on to their customers. The | | | | achieve that and build the right model, then you can |
| manufacturer gets the income from the purchase of | | | | create a very successful franchise opportunity. |
| the retailer, and/or the franchise fee, and the retailer | | | | |