Franchising System can be analyzed in two groups. Depending on the country, we can categorize it as International and National Franchising. According to the opportunities there is also Product and Brand Franchising and Business Format Franchising as sub categories.
A. What are National and International Franchising?
If the franchising contract is done between parties in the same country it is called national franchising, If the contract is between two countries than it is considered international franchising.
B. What is Brand and Product Franchising?
Brand and Product franchising started in America as a relation between buyers and sellers. In this relationship the buyer tries to identify themselves as the seller. Through the marketing of the same products by different buyers creates a unity amongst firms. The important thing at this type of franchising the use certain brand and product. Car and Truck Sales, Gas Station, non-alcoholic beverage manufacturers are some of the examples to this type of franchising.
C. What is Business Format Franchising?
This system requires the franchisor and the franchisee to work together not just by the means of the product but also on the management level as well. The simplest way to explain this is ‘selling the brains’ of the brand. Hotels, restaurants, retail stores, rental and counseling services are few examples. This format has been used more in the last years and consists of 4 main topics. These are;- Franchisor gives rights to the franchisee to use the name or the brand.
- Franchisor has control over the franchisee through the term of the contract.
- Franchisor helps and supports the franchisee through the term of the contract.
- The royalty is paid by the franchisee in decided terms.