There are three major types of the franchise system of business. In fact, if we are to analyze the overall scheme of things we will find that these are the only three methods of the franchise system that are currently being used. The first and most widely used of these types is the business format model of the franchise. In this case, the franchisor upon payment of a certain franchise fee provides the franchisee with an already planned and running business. The franchisee is then allowed to run a unit of the pre-existing business model by using his own resources. Many construction companies have adopted this model of the business franchise in order to expand their businesses and make their brand better known.
In most cases where the business format system of the franchise is used the franchisor provides the franchisee with a lot more than just a brand name. This does not mean that the brand name does not mean a lot. It simply implies that a lot of other perks and benefits are given in addition to the brand name. In many cases, the franchisor gives the franchisee employees proper training about the standard ways, methods, and means to run a unit of the model. This is very important because the franchisor is already a well-known brand and has set some standards for itself. You must keep in mind that although it is the franchisee’s money that is at stake the franchisor has even more at stake.
A good reputation is what makes or breaks a franchise. A badly run unit will lead to loss of money to the franchisee but can potentially ruin a franchisor’s reputation. Product franchise and manufacturing franchise are the other two well-known types of the franchise system. A product franchise is the type of the franchise business that where the franchisor is a manufacturer and the franchisee is a distributor of a certain product. A manufacturing franchise is that type of the franchise system where the franchisor merely lends its brand name to the franchisee. The rest of the work is done by the franchisee.