In this age of development, many brands whether small, medium or large are learning to expand its approach more towards the customers. On the other hand, several investors in the market with adequate monetary funds are looking ahead to grow out their money, but also being on the safer side.

Taking that notion in mind, business via franchise route is slowly and steadily spreading its roots in the minds of entrepreneurs. The particular style of business is probably familiar among group of people who must have observed the retail and food establishments being franchised in the market. But for those who are uninformed about the type and is looking to establish a business, franchise is basically getting an official permission from the owner, the manufacturer or the retailer to use their products and services for sale purpsoe, under certain terms and conditions.
In simple terms, franchise business means permitting an individual or group of people to market the name of a successful brand and sharing their strategies on growth within certain conditions and locations.

With its scope getting wider with time, many brands/ companies of different industries are actively linking into franchise route for services. Such industries include retail, health & spas, food & beverages, real estate, education etc. It has been assumed as a convenient route to take forward the legacy of brand under maintained relationships with franchisees.

Types of franchise system
Now that franchise is not a narrow concept, one needs to get fully aware of its functioning and areas encompassed in it. Here are the different types of formats followed by the owner of the brand, one who is authorized to decide the type of layout he/she wishes to choose for their franchise model.

Product Distribution Franchise

This particular franchise models follows the path of supplier-dealer concept. The franchisee distributes the products or services of the brand, not necessarily operating the outlet under the name of the brand. Disseminating the products under independent centers is agreeable. Though, there are several guidelines which a franchisee needs to follow, say for example, distributer is liable only to sell the products of franchisor’s brand.

Some well known product distribution franchises are Coca-Cola, the Ford Motor Company, etc.
Product distribution franchises deal mainly with large products such as automobiles and auto repair parts, vending machines, computers and some inventory for convenience stores.

For example, a school is agreed to use and promote the shoes of a particular brand among children, of which the franchise has been taken by the school.

Business format Franchise

Unlike the product distribution franchise model, here the procedure followed by franchisee-franchisor is quite like a complete agreement. It hence makes the relationship of both the parties dependable on each other. When a person takes the franchisee of a particular company, under this franchise model, he/she gets an access to the products and services under franchisor’s trademark, as well as the terms placed by the franchisors to be followed in order to conduct the business.

The agreement is prepared on the ground of legal contract, which comprises of the franchisor’s name, goodwill, product and services, procedure, manuals and standards, marketing operation system and support facilities.

In short, investors needs to have a required a space to set up an outlet, and enough of the monetary funds to pour in to buy the franchise.

Business format franchising is the most popular type of franchise system and the one generally referred to when talking franchising. Major brands under retail industry follow this type, now the other industries in Indian market are also gearing to follow the footsteps.

Types of franchise ownership

Single unit franchise: The single-unit franchise store is usually a first step taken by an entrepreneur while taking up a franchise of any brand. With this type of ownership, a franchisee is authorized to operate only the single unit of the brand, which also includes the responsibility of handling daily business operations.

Multi unit franchise: In this multi-unit franchise type, a franchisee gets authority to bring in more than one franchise outlets at different locations. In this case, multiple units are usually sold at a reduced rate per unit. In this type of operation, the franchisee partakes less in the day-to-day operations of the unit.

Master franchisor: By getting a master franchisee of a franchise company, individual or corporation attains the responsibility of an ownership of specific location. The master franchisee or a sub-franchisor can further distribute the franchise to help the company to open several units under specific territory. After opening several franchise outlets, the master franchisee provides required training and support to its franchisees.

Buying an existing franchise: In some cases when a franchisee wishes to transfer his already opened outlet to his/her acquaintances, the ownership is termed under this type. There are pros and cons of buying an existing outlet.

Area developer: Area development is similar to multi-unit franchising. The only difference is that they are assigned to open certain number of outlets in a certain period of time and in a specific geographical location. They are also termed as “mini-franchisor”. The job is certainly not for the beginners.

Getting into franchise industry can make you reach to the heights of success, if guided properly. All that is needed is a right product with right entrepreneurial skills and a right area to grow.