Tom’s Franchise Information Blog

There are two types of franchises:

1. Product Distribution Franchises

2. Business Format Franchises

The most important part of product distribution format is the product manufactured by the franchisor. Some pre-sale preparation is often required on the franchisee end before they are sold. Another major difference between the two types is that in the product distribution type, the franchisor licenses its trademark and logo to the franchisees but does not provide the entire system to run the business. In the business format ones, the whole system is provided by the franchisor to run the business. Most of the franchises these days are business format franchises. In the United States, 80 percent of the total 770,000 franchised businesses are business format franchises.

Product Distribution Franchises

In these, the franchisees sell the franchisor manufactured products. These can often be found in the drinks, automobiles and automobile accessories industries. These look somewhat like the supplier-dealer relationship. But in product distribution franchises, the franchisee gets more services from the franchisor as compared to what a dealer will get from its supplier.

Business Format Franchises

In these, the franchisee uses the franchisor’s brand name and trademark. And most importantly, the franchisee uses the entire business system of the franchisor. This format helps in achieving consistency which results in sustained success. In this structure, the franchisee is provided with a detailed plan which explains almost everything related to the operation of the franchise. The franchisee is given the training about the management of the building, marketing and advertising of the franchise, recruitment, dressing of the staff, greeting the customers and every other thing related to the franchise operation.

Both of these types have their pros and cons. Only hard work and good interest in your business can guarantee your success. The franchise technology has grown significantly lately. You can use franchise management software to make your experience a much successful one. These softwares simplify the nature of running the franchisor business model. The main features, good franchise software provides are data collection, corporate communications, administration, new store management, and marketing management, thus making your life easy.

Netsolace provides customized franchise management software and Franchise Software Technology solutions to optimize and automate the way your franchise system operates.