If you’re thinking about opening a franchise, you know the choices are endless: high-profit, big-name franchises. Moderately priced franchises. Low-cost, home-based franchises. How do you know which types of franchises are right for you?
We’ve got a guide to the five main types of franchise. Once you’ve narrowed down the franchise segment you’re drawn to, the next step is to find one that best fits your financial picture as well as your interests.
A job franchise is a low-cost, home-based franchise with little to no overhead. This is typically a single-owner venture with a few staff members. These are great choices for people who want the flexibility of working from home or want a side-hustle to save for retirement or putting their kids through college. It is intended to be the type of franchise that can replace a solid salary but won’t necessarily make the franchisee wealthy. Common industry categories are cleaning services, event planning, and home improvement/maintenance.
The International Franchise Association (IFA) describes this business model as one in which the franchisee simply sells the franchisor’s products – in other words, acts as a distributor. Typically, you’ll find these are large product dealers and make up the highest percentage of total U.S. retail sales. Common industry categories include computers, cars and appliances, and vending machines.
This is where big money can be made, but these types of franchises also require a huge capital investment and an experienced major investor. The investor franchisee usually sets up his or her own management and operations to oversee sometimes hundreds or thousands of individual franchises for the franchisor. The franchise owner is seeking a lucrative ROI and doesn’t get involved in daily operations. Common industry categories include large hotel and restaurant chains.
Next is the conversion franchise which is a modification of standard franchise relationships. Many franchise systems grow by converting independent businesses in the same industry into franchise units. It may also be dubbed management franchising. It’s an ideal system if you have previous managing experience because it allows you to really take charge of the business. It may also be referred to as product or single operator franchises which is a great choice if you’re an independent contractor who might want to invest in a niche franchise. It allows you to be your own boss with a big brand name to increase customer base. You invest in trademarks, marketing, advertising and training in exchange for the brand name. This works well for plumbers, electricians and florists, to name a few.
Business Format Franchising
These types of franchises are what most people think of when they think of the word “franchise.” It’s the most commonly found and the most traditional. In this kind of franchise, the franchisee pays a franchise fee to operate the parent company’s brand and use its business model. It follows the popular franchising adage of being in business for yourself, but not by yourself.
According to the IFA, the franchisor is heavily involved in terms of how the service or product is delivered and how the business is run. There is a contractual agreement between franchisor and franchisee for a given period of time. The various franchise fees, royalties and advertising fees, and startup costs cover the expert training, support, and ongoing business advice. Common industry categories include restaurants and retail.
Franchising with Wild Birds Unlimited
Wild Birds Unlimited is a classic business format franchise. Our award-winning franchise began as a single store 40 years ago. Using this profitable business model, we have grown to more than 350 franchise locations. We believe that the expert training, guidance, and support we provide our franchisees is key to our ongoing success.
If you’re trying to decide on the best franchises, we here at Wild Birds Unlimited believe in doing something you love. Our vision is to bring joy into our customers’ lives by sharing our passion for birds and our knowledge about the hobby of backyard bird feeding. Does that align with your passions? If you’re going to invest in something, let it be something you can be excited about that has a long history of success. To learn more, please fill out this form and join our flock!