Franchise business model is a feasible choice for both – a franchise owner and a franchisee. It is leading to economic growth and brands expansion in India and creating employment. When we talk about the Indian market, there are a number of local and international brands operating successfully in different sectors via franchise business model. Some of the popular brands which are expanding via franchise business model include- McDonalds, Domino’s, Subway, Kidzee, Khadim’s, Lakmé Salon, KFC, Baskin Robbins, Pizza Hut and 7 Eleven. Some other leading franchise opportunities are EuroKids, THANCO Fresh Fruitz Ice Cream, Dixy Chicken, Pizza Corner, Kazari Apparels and so many others.
Well, franchising is preferred way to expand for most of the small and big brands because it has already proven that it is a great way for expansion. Franchising is a flexible method but each franchise business operates differently. Moreover, it means franchising opportunities can be categorized as per the involved factors like- business strategy, franchisee involvement, investment, operational support, marketing and promotion bear, etc. More recently there are three types of franchise business models which are opted by most of the brands for expansion;
- The business format franchise
- The product distribution franchise
- The manufacturing franchise
Business Format Franchise
Most of the top franchise brands like Nike, Burger King and McDonalds, etc. all are following this model for expansion. Under this model the relationship between a franchisor and franchisee is stronger as compared to the other models. The format is more advantageous to a franchisee as it provides a wide range of services from franchisor side. A franchisee gets marketing, training, operational, production, advertising, strategic planning and quality control guidance support from franchisor. The format also includes assistance from the franchisor for appointment of staff and organization of day to day marketing activities at local level to provide support.
The Product Distribution Franchise
This is the oldest method of franchising. Under this model, a franchisee has right to distribute the products provided by the manufacturer. Franchisee needs to make payments for using the trademarked products of franchisor or manufacturer. Also, the franchisor does not offer continuous support to the franchisee like the business franchise business model. The product distribution franchise model is more popular in manufacturing and automobile industries and followed by the brands like Samsung, Apple and many others for expansion.
The Manufacturing Franchise
This is again for manufacturing industry. Generally here the franchisor is a manufacturer company who gives exclusive right to the franchisee or the dealer to manufacture and distribute its products in a well-defined area. Coco Cola is a popular brand in this segment.
COCO, FOCO and FOFO- The Buzzing Models
Besides above mentioned models Company Owned Company Operated (COCO) model, Franchisee Owned Company Operated (FOCO) and Franchisee Owned Franchisee Operated (FOFO) models are the buzzing models followed by upcoming brands to strengthen their footprint more quickly in the country. However, they all also simply replicate the business model of a proven brand.
The Bottom Line -Franchise Models Are Legal Contracts
No doubt, franchising makes the task of starting a business easier, but, it is important to understand that all type of franchise business models are legal business contracts. Both the parties’ franchisor and franchisee need to follow the contract terms and conditions strictly. While a breach in the franchise agreement may lead to fine or other legal consequences.