Having a franchise is one of the most common ways to do business. To have a franchise means to have the license to run a business for another company and to be able to use the company’s logo and business model, and also their branding to run the business. You essentially are a store for that particular business and the only difference is that you have your own space and can run the business in pretty much your way, obviously while maintaining the standards of the parent company that you take the franchise for. Today, there are franchises for almost every type of business; food, clothing, cosmetics, accessories, and even flowers. There are many types of franchises today and it becomes difficult to identify between them and to understand which one is the best for you.
Following are the most common types of ownership with explanations:
Single Unit Franchise
A single unit franchise means that you run the business for one company or brand. This is the most preferred option for those who are getting into the franchise business as the investment costs are manageable and earn a substantial income. When a person has a single unit franchise they can focus on one single line of business and it is a good idea to start with such because the business could keep you occupied throughout the day. With a single unit franchise you can manage a few of zip/Postal codes allotted to you. Such a franchise also allows a person to invest all their capital in a big and established brand and focus at making it successful and make a reputation for themselves.
Multiple Unit Franchise
This is a good option for those who already have experience with running a franchise or are currently running one and are successful at it. Getting a multi-unit franchise is definitely an added responsibility and it is a good idea if you have someone to manage the first one you have. It could also be possible that you plan to get another franchise for the same business that you have the first franchise for. There are quite a few benefits of having a multi-unit franchise. It increases the option to reach a wider customer base and subsequently the possibility to market your first franchise. It helps to consolidate expenses as the same marketing material can be used and the resources can be shared between the two franchises. Multi units, in this case, are purchased in reduced per unit price and owner’s involvement in day-to-day operation become minimal. It is also important to first analyze whether you have the time and the money to be able to invest in two different locations before you make the decision.
This particular franchise has a certain number of units of the business in a particular area. This is not an easy task but is quite profitable as you have the sole rights to run that particular business in a given area and all the earnings from that business in that area come to you. The marketing becomes easier, the competition in that particular area isn’t there, and you can market the business without having to worry about beating the other franchise with the same business. You are, in this case, obligated to open a number of outlets in a geographic area in certain time.
This type of franchise comes into the picture when you plan to expand your business beyond your city or maybe even your country. The master franchise ideally has the control of the concept or the main business and earns revenue based on royalty. The initial franchise fees and royalties are shared between the Business and the Master Franchisee.