In Brief:

      • There are five different franchise models to choose from when it comes to finding the franchise of your dreams.
      • The conversion franchise is a system in which an existing business is converted into a franchise under a franchise.
      • A product franchise allows business owners to a sell a trademarked franchise product.
      • An investment franchise requires a large amount of capital, but is the highest grossing franchise model.
      • The business format franchise is the most popular franchise in existence.
      • Job franchises require a minor investment to get started as many job franchises can be operated remotely.

Franchising has been a viable entrepreneurial option for decades. Franchise owners tout the access to proprietary technology and an established brand as well as the freedom that franchising creates. Although franchising spans across every major industry, there are five types of franchises to consider. Each type of franchise varies in financial commitment and time commitment, as well as the amount of revenue an entrepreneur can expect. These are the five different types of franchises and how you can buy your very own dream franchise.

The Five Different Types of Franchises

The Conversion Franchise

A conversion franchise is typically considered to be a hybrid between a small owned business and a franchise. In the conversion franchise model, an existing franchise converts an existing business into their franchise family. The franchisee will adopt the parent company’s practices, trademarks, rules, regulations, and more.

When the conversion franchise agreement is signed, the franchisee gains access to marketing campaigns, an existing customer base, experts, etc. Conversion franchises are an excellent option for existing business owners as they have the infrastructure and employees in place rather than needing to take the time to build from scratch. 

The Product Franchise

Under a product franchise agreement, the franchisee agrees to distribute the parent company’s products. Product franchises are typically in the vending, appliance, or automotive industry. Furthermore, product franchises agree to use the parent company’s trademarks as well.

Parent company’s greatly benefit from the product franchise model as they can greatly expand their influence over a given region. Car companies are the greatest example of product franchises. Companies like Ford allow privately owned businesses to sell their cars while still raking in a majority of the revenue.

The Investment Franchise

Investment franchises typically fall under the high-capital level of franchises. Under this franchise model, the franchisee generates a large investment through investors or through their own funds. Investment franchises are usually found in the restaurant and leisure industries.

Franchises like Marriott allow for franchisees to construct their own motels under their trademark. The typical investment to construct and operate a Marriott hotel is around $20 to $40 million. Many investment franchisees usually lead a group of investors to raise a significant amount of capital required.

The Business Format Franchise

Business format franchises are the most popular franchises in existence. Under the business format franchise system, franchisees buy into a proven brand to gain access to all of the advantages that franchising creates. The most popular example of business format franchises are fast-food franchises.

The parent company provides a detailed plan, marketing tools, expert support, training, and more to ensure that the franchisee succeeds. Many franchisees prefer the business format franchise model as much of the work and strategy is planned out by the parent company.

The Job Franchise

Job franchises are typically on the low-end of the investment spectrum. Thousands of job franchises can be run from the comfort of a franchisee’s home leading to practically zero overhead costs. Under this system, the franchisee is only required to pay an upfront franchise fee, regular royalty fee, and any minimal startup costs.

Some popular examples of job franchises include billing, cell phone repair, travel consulting, and home maintenance. Job franchises are an excellent choice for entrepreneurs looking to crack into the franchise industry, but do not have a large amount of capital to work with.

Choose Your Franchise Model Today

Although there are five franchise models, there are thousands of franchises to choose from. You can find your dream franchise on AskMrFranchise.com and get connected with a franchise specialist in minutes. AskMrFanchise.com allows users to target franchises by industry, investment, and interests. Becoming your own boss is only a click away.

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