What are the Different Types of Franchises?
A franchise is defined as the granting of rights given by the owner of the rights - an individual or a public and private organization, to another individual or organization through any form of exchange such as rental or purchase.
The franchisor, who is the owner of the franchising rights sell it to the franchisees, the recipient of the rights. The franchising rights include the product or the service’s local distribution after paying the first payment and royalties. Like an independent firm, a franchise has local managers who serve as owners of the business establishment but franchise owners have greater powers in their outlet operations than company-owned store’s manager.
Types of Franchise Systems
Selling a certain product line is the right granted by a franchisor of their product and trade-name. The most common examples are gasoline stations and automobile dealers. Business format franchising is the new franchise system that offers the right to distribute a particular product as well as granting rights of using a specific business format and sales approach in marketing products and services.
When it comes to image and business format,the franchisee is obliged to use the same and comply with changes approved by the franchisor. However, the franchisee is not limited to the ideas of the franchisor. As a franchise owner, the franchisee can work on business strategies that work best with their customers in his or her respective market. On the other hand, there are some franchises that have control over their franchisees in the same manner as company run outlets and the franchisee has less discretion towards any changes that would respond to the needs of the local market.
Location Strategy
Every franchisor has a specific location strategy but there are two primary types of patterns of outlet diffusion. First one is the hierarchical pattern that focuses on stores in ‘high-traffic’ areas in densely-populated cities before it establishes more stores in areas with a smaller population. This type of pattern of diffusion is often used by new franchisors to place the outlet in competition with other firms.
The second one is called the neighborhood wave pattern where a certain franchising firm put up as many stores as possible within a region. Several franchises that work based on Area of Dominant Influence usually use this pattern of diffusion in order to easily establish brand-name recognition and earn local reputation.
How do Franchises look for optimal locations within a region?
These are the different strategies in order to find the optimal locations in a region:
1. Scientific location techniques. This technique considers the importance of different factors including local demographic patterns, traffic speed and amount in certain sites, and relationships and interaction with other outlets.
2. Created Optimal Locations. The best example for this is in a mall. For many franchises mall stores offers greater access to a specific and huge number of customers. Usually, malls contain both franchise outlets and company branch outlets. However,high rents are demanded as rent from the franchisees especially when they want a particular location with large anchor stores where there are a huge number of people.
3. Locating Central Urban Business Districts is actually a new way for many franchises to find their outlet location. Franchises have found new service markets in central urban districts and more and more companies are taking a stab at competing in these new service areas.
Why is Franchising in a Rural Location a Great Option?
Regardless of whether you are a novice or an experienced franchisee, you still need to take into account your location to set your franchise up in a better market. Compared to large cities, you will find fewer businesses in rural areas that can give you more options when it comes to buildings, real estate locations, etc. In fact, you can get away without costly real estate and rental fees. Enjoy the most affordable price once you chose to set up in the rural areas and enjoy the quality space provided for the business area.
If you’re quite anxious about competition, a rural setting is a good place for you to locate your franchise. Generally, rural areas have fewer businesses and it will give you peace of mind to develop your business through exceptional service to the local customers. Locals in rural areas are known for being friendlier. Well, this can be a good way to start developing your relationship with your local customers as you open your franchise’s door for business. Eventually, this will help your customers develop their loyalty and they will continue patronizing your products and services.
A franchise is defined as the granting of rights given by the owner of the rights - an individual or a public and private organization, to another individual or organization through any form of exchange such as rental or purchase.
The franchisor, who is the owner of the franchising rights sell it to the franchisees, the recipient of the rights. The franchising rights include the product or the service’s local distribution after paying the first payment and royalties. Like an independent firm, a franchise has local managers who serve as owners of the business establishment but franchise owners have greater powers in their outlet operations than company-owned store’s manager.
Types of Franchise Systems
Selling a certain product line is the right granted by a franchisor of their product and trade-name. The most common examples are gasoline stations and automobile dealers. Business format franchising is the new franchise system that offers the right to distribute a particular product as well as granting rights of using a specific business format and sales approach in marketing products and services.
When it comes to image and business format,the franchisee is obliged to use the same and comply with changes approved by the franchisor. However, the franchisee is not limited to the ideas of the franchisor. As a franchise owner, the franchisee can work on business strategies that work best with their customers in his or her respective market. On the other hand, there are some franchises that have control over their franchisees in the same manner as company run outlets and the franchisee has less discretion towards any changes that would respond to the needs of the local market.
Location Strategy
Every franchisor has a specific location strategy but there are two primary types of patterns of outlet diffusion. First one is the hierarchical pattern that focuses on stores in ‘high-traffic’ areas in densely-populated cities before it establishes more stores in areas with a smaller population. This type of pattern of diffusion is often used by new franchisors to place the outlet in competition with other firms.
The second one is called the neighborhood wave pattern where a certain franchising firm put up as many stores as possible within a region. Several franchises that work based on Area of Dominant Influence usually use this pattern of diffusion in order to easily establish brand-name recognition and earn local reputation.
How do Franchises look for optimal locations within a region?
These are the different strategies in order to find the optimal locations in a region:
1. Scientific location techniques. This technique considers the importance of different factors including local demographic patterns, traffic speed and amount in certain sites, and relationships and interaction with other outlets.
2. Created Optimal Locations. The best example for this is in a mall. For many franchises mall stores offers greater access to a specific and huge number of customers. Usually, malls contain both franchise outlets and company branch outlets. However,high rents are demanded as rent from the franchisees especially when they want a particular location with large anchor stores where there are a huge number of people.
3. Locating Central Urban Business Districts is actually a new way for many franchises to find their outlet location. Franchises have found new service markets in central urban districts and more and more companies are taking a stab at competing in these new service areas.
Why is Franchising in a Rural Location a Great Option?
Regardless of whether you are a novice or an experienced franchisee, you still need to take into account your location to set your franchise up in a better market. Compared to large cities, you will find fewer businesses in rural areas that can give you more options when it comes to buildings, real estate locations, etc. In fact, you can get away without costly real estate and rental fees. Enjoy the most affordable price once you chose to set up in the rural areas and enjoy the quality space provided for the business area.
If you’re quite anxious about competition, a rural setting is a good place for you to locate your franchise. Generally, rural areas have fewer businesses and it will give you peace of mind to develop your business through exceptional service to the local customers. Locals in rural areas are known for being friendlier. Well, this can be a good way to start developing your relationship with your local customers as you open your franchise’s door for business. Eventually, this will help your customers develop their loyalty and they will continue patronizing your products and services.
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