Types of franchising

Business franchising.

Also called business format franchising, it is the most popular type of franchising today. Under his leadership, the franchise company forms standards from all its business processes, and then trains franchise partners.

There are also 3 subtypes of franchising in business:

Production: Franchisee itself produces the product of the franchisor's brand based on the technology provided to it.

Product: Franchisee buys the goods ready-made and sells them in the company store.

Service: the franchisee provides services under the auspices of the franchisor's brand. (The franchisee may also sell and/or produce the product).

The whole essence of business franchising is that the franchisee opens a business at its own expense. The Franchisor is paid for intellectual property and the services it provides (for example, training).

Reverse franchising.

In this type of franchising, the franchisor himself invests in the creation and management of the business and remains the owner of both the equipment and the entire enterprise. Franchisee, in turn, receives part of the sales revenue.

There is also a type of reverse franchising - "soft" franchising. In this option, the franchisor invests in starting a business, and fixed costs and management remain with the franchisee.