What are the Various Types of Franchise Businesses?
When you think of franchises many imagine mountains of hamburgers and fast-food joints that grace every corner of the country. In reality, there are various types of franchise businesses you can start that match your business leadership style and interests. Here are five of the most popular types of franchise businesses:
Business Franchise is the most widely thought of when picturing a franchise business. The franchise operates under the parent company’s license and adopts the entire business system to market its product or service. The business style leaves no room for ambiguity as every aspect of the franchise is mapped out (i.e., location, operating manuals, quality control, etc.) and followed per the franchise contract. Examples of business format franchises include fast food, gyms, and retail stores.
Job Franchise is the most affordable of the franchise types and is often a service job that can be completed with a small investment of start-up fees and equipment. These are often run as a home-based business by the owner or with a small staff. Some job franchise businesses are cleaning services, residential lawn care, travel agency, plumbing, etc.
Distribution Franchise (also known as Product Franchise) is product-driven. Franchisees use the parent company’s branding to specifically manufacture and distribute their products or services to their local area. They do have some flexibility and freedom in how they operate their business. Companies such as car dealerships, computer resellers, and local soft drink distributors like Cola-Cola are great examples of Product or Distribution Franchises.
Another type of franchise, not widely known due to its large capital investment requirements, is Investment Franchising. Investment franchising is often used by large investors seeking a large return with no personal involvement in running the business. These types of franchises include larger properties and volumes such as popular hotels and restaurants.
The last type of franchise is the Conversion Franchise. It takes established businesses and turns them into franchise locations. A local company will change its operations to a parent company’s trademark, training, marketing, and customer service protocol. This allows franchisees to capture local, built-in clientele, and local companies in turn can benefit from the marketing of a well-established brand. Companies like florists, real estate brokers, and electricians are often conversion franchises.
There’s a franchise model for almost everyone and not one type fits all. Finding the right type of franchise can make a difference in your ongoing quest to be a business owner. If you’d like more information about becoming a College HUNKS Hauling Junk & Moving franchise owner, we welcome your interest and would like to speak with you about the available territories, our proven business plan, and more.
What should I do before buying a franchise?
Buying a franchise can be a rewarding business venture. To ensure franchising is right for you, and that you’re investing in the right type of franchise, there are a few things you should do before buying a franchise.
- Assess your strengths, interests, and skill set. Knowing what your strengths and interests are and aligning that with your interest will make a difference in whether you can navigate the challenges that come with franchise ownership. Owning a franchise is a fit for business owners who like to follow a proven plan and excel at implementing an established system.
- Do your research. Learn about the franchise and industry you’re seeking to start a business in. What is the track record of the business? What are the industry trends and potential for market growth? To avoid future downturns, research the volatility of the franchise to ensure it is recession- and pandemic-proof. Review the commitment requirements and be realistic with your goals and expectations. Read and seek out the testimonials, feedback, and experience of existing franchise owners to gain insight into their first-hand experience.
- Review your finances. Buying a franchise involves more than fees and equipment. You’ll want to assess your capital to include hiring employees, maintenance and utilities for your building, and additional expenses not included in your franchise agreement.
- Consider the ongoing cost of running the franchise. Franchise fees and equipment are just the beginning of running a business. Consider if the franchise you are purchasing has annual fees or requires a percentage of the franchisee’s yearly earnings. Be aware of the full financial scope required to sustain your business year after year.
- Read the terms and conditions of the franchise agreement. Franchise agreements contain all the information you need to make an informed decision. From cost analysis to expectations in daily operations to what to do if you decide to terminate your contract. When deciding on a franchise be sure the terms and conditions are ones you can comfortably adhere to.
Franchises are the fastest growing way to start a business. With any business, it’s important to take steps to ensure the business you start is one you can sustain for many years. If you’re ready to learn more about buying a College HUNKS Hauling Junk & Moving franchise, we’d love to explain what to expect. Call us at (878) 205-2146!
What are some tips for starting a franchise?
Franchises are ideal for starting a business with support and an established brand. Before diving into a business venture, here are a few tips to consider when starting a franchise.
- Assess your skills and personality – Do you prefer to work directly with consumers or do you prefer doing business with other business professionals? Are you ready to start a business and are you a good fit for the systematic plan of a franchise? To establish continuity across their brand, parent companies have franchise rules and conditions set in place. Assess whether you have the drive to follow a systematic plan or the desire to create your own.
- Talk to other franchise owners – Find out the real day-to-day commitment needed to run your business. Be aware of the challenges and get tips on how to avoid and overcome them from those who have lived through those experiences.
- Do your research – Study the industry, target market, and the projected rate of growth over the next few years. Learn the history of the company you are considering buying a franchise with. Do their core values align with yours? Is the company product or customer-focused? How was the business started and what are their goals as a business and how do they incorporate and coach their franchise-owners toward success to help meet those company-wide goals.
- Measure marketability – Consider the area you want to start a franchise in and what type of product or service you will be selling. Is it marketable year-round? For instance, frozen yogurt or shaved ice franchises may be nice during the humid summers but business could be slow during the cold winter months. Evaluate the need and existing market saturation in your area.
- Consider the cost associated with starting and running a franchise – From start-up to annual payments and additional expenses not included in the start-up cost sheet. Be sure a franchise is an investment you can afford.
- Review the Franchise Disclosure Documents (FDD) and hire an attorney to review it – The FDD outlines the terms and conditions of owning a franchise. It’s important you understand what’s needed and expected when entering into a franchise agreement. An FDD is a legal document and parts of it can be full of legalities that are best explained by an attorney experienced in reading FDDs and who can also help you assess if owning a franchise is a smart financial move for you.
- Put together a Net Worth Statement by subtracting your liabilities from your assets – It’s best practice to have this for your records to assess if the financial investment in a franchise is right for you. The business’s franchise department may also be interested in reviewing your net worth.
After you’ve done your research, talked to other franchise owners, read the FDD, and considered your overall investment, take a genuine account of yourself and determine if you are ready to leap into franchise ownership. Like owning a business, franchise ownership is not for everyone. It’s the most successful and fastest way to start a business with the support and proven built-in system. The most proven system will work when you are prepared to implement it. If you are considering franchise ownership, contact us to learn more about a College HUNKS Hauling Junk & Moving franchise.