Common Methods of Franchising: Which Is the Best Choice for You?

What methods of franchising are available to the business owner? Which form of franchising is the most common today? Which franchising business model should you use?

There Is More Than One Way to Benefit from Franchising Your Business

Are you considering transitioning your business to a franchise model? 

If you understand the benefits of being a franchisor, you probably are. What you may be less aware of is how to transition your business to the franchise model, and what methods of franchising are available to you.

If your business is ready to franchise, this second piece of the puzzle is critical to your success as a franchise business.

5 methods of franchising your business

Not all franchises are equal, and this includes how the business model operates. While the general concept is the same ─ you license your brand name and business operational model to franchisees, who help your business to grow faster ─ the structure and framework of the franchise model can be vastly different. Which is best for you depends on many factors, but which form of franchising is most common today?

Single-Unit Franchising

The most common way of franchising is the single-unit franchise. This is where a person or company buys a single unit to operate in the company’s name in a specific location. As you expand, you’ll have increasing numbers of franchisees operating their businesses in different areas.

Sequential franchising 

A sequential franchising model allows a franchisee to add to the single unit they own. You’ll do this one unit at a time, so the franchisee can prove they are able to manage each unit and increase the number of locations successfully. This should ensure that a single franchisee does not overstretch, thus helping to maintain your good reputation.

Area development

This franchise model allows a franchisee to buy several units in a specific location, without the need to prove they could successfully operate each unit in turn. You’ll expect the franchisee to manage each unit themselves, and the franchise agreement may include the expectation of opening a stated number of units within a specific timeframe.

Sub-franchising (Master franchising)

This type of franchise model involves layers of franchising. You may have responsibility for the business nationally, but you set up other franchisors as sub-franchisors in distinct regional locations. These now become responsible for developing their regional presence by enlisting further franchisees (sub-franchisees). The sub-franchisors (also called master franchisors) are responsible for attracting, training, and retaining sub-franchisees in their regions.

Area representation

This type of franchising model is like sub-franchising, except that your regional representatives would have less responsibility than a sub-franchisor in the sub-franchising model. The area representative may be responsible for attracting, training, and providing ongoing support to the franchisees in their region, but this is as far as it goes.

Which type of franchise model is best for you?

As a business owner looking to take advantage of franchising your business, you have a wide range of options available to you. The choice you make depends upon many factors, including:

  • The type of business you operate

  • The relationships you want with your franchisees

  • Your personal and business goals

  • The financial and time commitment you wish to make

Each type of franchise model has specific advantages and disadvantages for the business owner, and these pros and cons are also specific to your individual situation.

Is your business ready to franchise? Are you unsure of which franchise model is best for you? As franchise consultants, we have the experience and contacts to make your franchising journey a success.

For more information, book your free consultation with New Ground Consulting now.

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