What is franchising?

By Dylan Jomy2 min read · Posted May 4, 2023

55
Views

The term franchising is very commonly used in the world of business and occurs between two businesses or brands. What is it? Well, this article will go over what franchising is, the different types of it, and why it is essential.

In a nutshell, franchising is a marketing strategy in which the owner of a business system (franchisor) gives a person or group of people the right to operate a company selling goods or offering services while utilizing the franchisor's business system.

Types of Franchising

  1. Product Distribution Franchising: Involves the distribution of products through a network of franchises. The franchisor provides products to the franchisee, who sells them to the customers.
  2. Business Format Franchising: Involves the complete business model and system being transferred from the franchisor to the franchisee. The franchisor provides the franchisee with everything they need to operate.
  3. Management Franchising: Involves the franchisor providing the franchise with management expertise and support.
  4. Conversion Franchising: Involves an existing business turning into a franchise. The business owner enters into a franchise agreement with a franchisor and agrees to operate under the franchisor’s brand.
  5. Area Development Franchising: Involves the franchisor granting the franchisee the right to develop and operate multiple units within a specific geographic area.
  6. Master Franchising: Involves the franchisor granting the franchisee the right to operate as a sub-franchisor in a specific geographic area. A sub-franchisor is responsible for recruiting and managing franchises within their territory.

Why is Franchising important?

Franchising is essential for expanding brands, brand recognition, risk management, and improving sales economics. Overall, franchising provides a way for businesses to expand and grow while minimizing risk and leveraging the strength of both the franchisee and franchisor.

Conclusion

In conclusion, franchising may be a successful strategy for companies looking to grow their clientele and revenue. There are many risks associated with franchising; however, the benefits include the ability to own and operate the business using a proven model, access to training and support from the franchisor, and the potential for higher profits than starting a business from scratch.

References

About The Author

Dylan Jomy

12
Articles
3081
Total Views
10
Total Likes
0
Total Shares

Hi, I am Dylan, an Article Editor at Pitch Labs! I am fascinated by business, finance, and the stock market. I also love to write, help, and inform people about economics-related topics. I plan to educate myself on business and STEM-related matters as well.

See more posts by Dylan Jomy

Comments

More in Legal


Legal » Regulations

What is antitrust law (USA Specific)?

by Roxanne Guiney ·Jun 14, 2024

6
Views

The U.S. Antitrust Laws are a collection of acts that protect consumers and the fair market by preventing anticompetitive business practices. Read more

Legal » Regulations

What is a subsidy and what does it do for a product?

by Favour Ndime ·Jun 10, 2024

9
Views

A subsidy is a direct or indirect help to an individual or organization in the form of cash or breaks in production costs or taxes. Read more

Legal » Protections

What is a warranty?

by Asad Awan ·Jun 5, 2024

15
Views

A warranty is a guarantee by a manufacturer to repair, replace, or refund a faulty product. Learn more about the types and significance of warranties. Read more

Legal » Structures

Understanding Corporations: A Detailed Guide

by Geofry Ouma ·May 31, 2024

29
Views

A comprehensive overview of corporations covering key features, advantages, the incorporation process, and their importance in economic growth and innovation. Read more

Recent articles


Financial » Economics

What are the different Marketing Concepts?

by Degreat Michael ·Jun 12, 2024

9
Views

Learn the oldest marketing concept– production concept, which emphasizes affordability and availability. You’ll discover brands that have applied it. Read more

Financial » Economics

What is GDP? Everything You Need to Know

by Fredrick Ngugi ·Jun 7, 2024

20
Views

Gross domestic product (GDP) is the measure of the total value of products and services produced within a country annually or quarterly. Read on to learn more about GDP. Read more

Financial » Accounting

What is interest?

by Asad Awan ·Jun 3, 2024

18
Views

Learn how interest impacts borrowing, lending, and saving before investing your hard-earned money. Read more

Marketing » Advertising

Who Works in Marketing?

by Warren Patterson ·May 29, 2024

24
Views

What are specific roles involved in the field of marketing? Find out the most common roles and the certain skills needed to excel in each. Read more

Join Our Community


Looking for something else? Get your questions answered in our free online learning community!

Entrepreneurial Resources


Jumpstart your next business with our free resource library.

Loading...

Disclaimer


Our organization cannot give out official legal/fiscal guidance. All articles are written by volunteers and it may be beneficial to contact professionals to assist your understanding of the information and to guide your action. Pitch Labs bears no responsibility for the results of actions taken based off of article content or any other form of assistance given.