As a franchisor or a franchisee, there are three major franchise options and each one operates in its own way.
A Business Format Franchise
A Business format franchise is the most common and is a franchising agreement where the franchisor provides the franchisee with a tried and tested business blueprint, including the name and trademarks, for the franchisee to run independently. The franchisor provides training and assists the franchisee with the launch and running of their franchise and in return, the franchisee pays the franchisor a management services fee. Fast food restaurants are good example.
A Product Franchise
A product franchise is a franchising agreement where the franchisor allows and controls how the franchisee distributes its products and the franchisee has the right to use the franchisor’s name and trademarks. Franchisees must pay fees or buy a minimum amount of products from the franchisor for these rights. Tyre franchises are a good example.
A Manufacturing Franchise
A manufacturing franchise is a franchising agreement where the franchisor allows a manufacturer to produce and sell products under license, using its name and trademark. Soft drink companies are a good example.
Which Franchise Option Suits You Best?
SA Franchise Brands