by Franco Andretti

With the research that you may have already done, you probably realize that there are different types of franchise opportunities to invest in. There is a lot for you to learn in order for you to be educated in this type of industry. When it is finally time for you to commit to a franchise, you will want to feel secure about your choice and know that you have protected yourself against a bad business decision. It is in your best interest to know all you can about the difference types of franchise opportunities.

Although there aren’t any hard and fast rules, you can generally categorize any franchise in one of two ways. These two main groups make up most all of the franchise opportunities available to you. The first is known as product and trade name franchising. The second is called business format franchising.

Industry names like automobiles, gas and soft drinks/beverages are an example of the product and trade name franchising group. These large organizations supply any merchandise, logo and trademarks and even take care of all of the advertising. The franchisee does not pay royalties on any of the sales. The franchiser’s responsibilities are to help to find the best location, set up the store and supply goods such as vending machines or anything else required for the business to run. The franchisee will only sell the product or service of the franchiser.

As the name implies, business format franchising is a way of operating a business by the services provided to the franchisee. The business model relies on the use of trademarks and logos. With business format franchising, the franchisee will locate a site and the franchise company will handle the design and layout of the business.

When some studies suggest that the colors of the walls and seating in fast food restaurants seem to influence how quickly the customers eat, it’s not surprising that franchisers are eager to engage with the franchisee at even this most fundamental level. The franchiser will also be involved in training and advertising, even having a say in the preferred philosophy and mindset of its employees.

Some common examples are fast food chains, real estate agencies, convenience stores as well as recruitment agencies.

There may be a fee that the franchisee will have to pay up front and it is referred to as the start up costs. Additional payments are the royalties for the continual support of the franchiser.

Whichever type of franchise you feel is best, you have to consider how good a salesperson you are and which area you feel you’d be best suited to. Remember, the popularity of a brand name may not translate into immediate success. Franchising may be a great business opportunity, but you should choose your franchise wisely.

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