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  • 1 Feb 2022

  • 1 Feb 2022

What is Franchise Business? Types, Pros and Cons

What Is a Franchise?

A franchise can be considered as the type of license which grants the franchisee access to get the proprietary of franchisor business knowledge, processes, and trademarks, which provides the franchisee to sell a product or service under the name of the business of the franchisor.

Understanding Franchises

When the industry creates the marketing strategies, then it examines which customer segments give more profit. When the industry generates the most revenue, then it brings an increase in productivity, ultimately benefitting the market. It also helps to target new promotions, which helps to target the most valuable customers to increase marketing efficiency and productivity.

Whenever the business wishes to increase productivity and market share at low cost, then it moves towards franchising its product and brand name. The franchisor is the original business, and the franchise is a joint venture between the franchisor and the franchisee. This sells the right to use its name and idea, and the franchisee buys this right to sell its goods or services under a model and trademark which already exists.

This marks their popularity for the entrepreneurs who wish to start a business in the red ocean strategy, which includes fast food. The franchise business does not have to spend money to get the brand name, as it can have access to an established brand name of a company.

When to consider this opportunity?

Whenever a person wishes to invest and earn more profit, then they opt for the Franchise business. Its probability of failure is less, as it would be a proven system.

It does not make us worried about the growth and productivity in the market, as it does not close the services, and goes on with continuation in growth. It also removes all the obstacles that come in the way of growth and escalates high on the pavement of progress. It deals with all the difficulties, and ultimately brings solutions to it.


1. Job-Franchise

Job, franchise

Job franchise can be considered as a low-cost franchise, that wishes to start its own franchised business alone. These are operated by such single entrepreneurs. It also can be operated with any specific trade or service. They purchase minimal equipment, limited stock, and sometimes a vehicle too, in order to provide services to the customers in a proper manner.

The services like travel agency franchise, garden care service, along with the commercial and domestic cleaning, cell phone accessories and real estate service, shipping service, and many more services mark their presence in this sector, which ultimately satisfies the demand of the customers.

Satisfied consumers will always interact with the brand, make a purchase, and recommend the products and services to friends and family. These also provide quality with their services, which contributes to the creation of the brand identity and thus enables the customers to approach its services. So an industry always looks for a quality delivery along with the quantity.

2. Product Franchise

Product, Franchise

Making products is not an easy process, it sounds easy, but it is too lengthy. Firstly a company needs to set goals before launching its products in the market. For this, it conducts market research, to find out the change in the interest of the consumer regarding the price, promotion, or quality of the product.

It also determines the features of the new product and the service associated with it, which helps the people to get an opinion regarding the same.

The product franchise is product-driver, which marks their importance in dealing with the supplier and dealer relationships. Here the franchisee plays the role of a distributor who distributes the products of the franchisor.

The brand name gets licensed by the franchisor, who does not provide franchisees the authority to rule on the entire system and run the business. This marks their importance in dealing with large products like the spare parts of cars, appliances, vending machines, and many more, which ultimately helps to bring more sales and productivity to the work.

3. Business Format Franchise

Business, format, franchise

As we have already studied any startup owners usually have a small budget initially as the profit grows gradually with time.

However, they need to establish an effective web presence further to let their services grow and reach the height of success.

At the initial stage, to be able to get a decent profit in the future markets its products on a wide range.

The trademark of the franchisor is also used by these types of franchises, and the entire system to operate the services as well as marketing the product and service.

They also provide detailed agreement and procedures in every aspect of the business model, along with the proper training and support.

4. Investment Franchise

To grab the attention of the maximum audience, it is crucial to make sure to convey what is your status, and what you offered exactly.

It should also consist of some options that give a brief about the services, along with the link to the page, that will be easy to access. It offers a good option for the visitors to access the services and know about the services of the company.

When more visitors come to the site, then after finding it trustworthy, they invest into the franchise.

These include large-scale franchises which are associated with huge capital investment, like the big hotels and restaurants, by engaging their managing the team of the franchisor that operate the business to gain large share and productivity.

5. Conversion Franchise

Conversion, franchise

It is considered as the modified relationship that connects the franchisee and the franchisor. It offers the platform to the many franchise models to grow high and achieve the peak of success by turning their services into a trademark, which differentiates a product or service from another of its kind in a legal way also recognizes the source ownership of the brand of any company.

By trademarking a company name, one makes its services and products distinctive or exceptional in terms of its competitors, becoming their intellectual property. In doing so, it prevents opponents from copying or stealing their brand.

The company grows in the franchise units and adopts marketing, advertising, training system, and also client service standards, which ultimately increase the procurement savings. The franchisor gets the potential to grow high with the royalty fee income.

The real-estate brokers, professional services companies, home-services, like electricians, air conditioning, and many more industries use the

As we know there are merits and demerits, pros and cons in every work, and service we go with.

Pros and Cons


It needs to go from the low risk, as it owns and invests into a business that already exists, and a brand in the market, which helps to bring more profit and productivity in the market. This helps to grow the work to the peak of success.

It provides training with the technology of the proven services which is already in use, to the person who owns this franchise business and provides him proper methods and strategy in the training.

There are several kinds of marketing strategies that include Marketing Plan, Digital Marketing, Direct Marketing, Email Marketing, Mobile Marketing, etc. which helps the services in countless ways.

For example, raising brand awareness, generating leads, increasing revenue, building trust in your brand, etc, and a franchisor already works with its technique, and pushed the growth quickly.

The franchisor provides all kinds of support to the customers and the investors. It uses its technologies and method to bring solutions and support. It provides help with respect to the location as well. This ultimately helps to bring more connections and links with the work and services.


Before buying the rights of the business, the initial payment has to be paid, which is a must. It requires the large cost of buying the license of the brand, which always varies, like from lakhs to Crores.

The payment of ongoing royalties has to be paid at regular intervals, which is calculated based on the total sales of that particular outlet.

It could be paid on a monthly or annual basis and ranges from 5% to 12%. After the purchase of the franchise, the pre-decided rules and regulations need to be followed.

It also needs to pay funds for the market around 1% to 2% of the sales, also the buyer has to get approved by the franchisor because the business cannot be sold to any stranger in the market.

[The images are being taken from the registered companies and belong to their respective owners only.]