While research ing fra nchise opportunities , it may be a surprise to discover that there are several different types of franchises that you may not have considered . There is a wide range of varying franchise categories, all with different monetary expectations and business arrangements. According to the Franchise Opportunities Handbook however, there are primarily four main types of franchises: product/trade name franchising, manufacturing franchises, business format franchises, and business opportunity ventures. Each is different in their basic business approach, and also var ies in the structure of the expectations and terms set forth in their franchisor/franchisee agreements.

In the first franchise type, product/trade name franchising, a franchisor owns the right to their name or trademark and sells that right to a franchisee. Upon purchasing that right, the store owner has the authority to distribute goods by the manufacturer, under the manufacturer’s name and trademark. In this arrangement, the franchisor controls the distribution of their product in retail outlets, and may charge the franchisee a fee or require they purchase a minimum inventory of product.

Manufacturing franchises are found most commonly in the food and beverage industries. In this franchise relationship, the franchisee purchases the right to produce a product and sell it to the public, under the name and trademark of the franchisor. For example, most bottlers of soft drinks make, package, and distribute soft drinks using ingredients from the franchise company.

In the most popular form of franchising, business format franchising, a franchisor will provide a franchisee with a proven format for operating a business. The franchisee uses the name and trademark of the company along with the business method, and receives assistance and ongoing support from the franchisor in the opening and operation of their business. For a start-up fee and ongoing royalties, the franchisor provides the franchisee with a range of services such as training, marketing assistance, creation of a business plan, management support, and product supply.

Lastly, business opportunity ventures involve an independent business owner buying and distributing the products from one company. An example of this type of franchise would be a vending machine route. The company supplies the business owner with clients or accounts and receives a fee from the business owner.