GlobalBX

Choices – Lots of Choices
The decision to buy a franchise as your entry into the world of business ownership should not be taken lightly.  Franchising is one of the most popular ways for people to run their own business, but even that field can be divided into subsidiary choices.  Once you have determined that a franchise purchase is the right path to take, your next move is to decide what sort of franchise to buy.  There are five distinct types:

1. New Single-Unit Franchise
This is the most common form of franchise operation.  Whether retail or wholesale, mobile or work-from-home, a single-unit franchise involves direct, day-to-day oversight by the owner.  In most cases, a small group of employees assist the owner in all aspects of the business, except for management.  In others, especially those that operate longer hours or even around the clock – a convenience store, for example – one or two assistant managers supervise the business whenever the owner is away.  For smaller single-unit franchises, the owner may actually be the only employee.  This could include mobile-type operations like a carpet cleaning service or home decorating consultancy.

2. Existing Single-Unit Franchise
As with the above example, this type of franchise ownership involves just one location or operation.  It is different, however, in that the business has been around for a while and most likely enjoys a fair amount of success.  Owners sell existing franchises because they are ready to retire, have other business interests they wish to explore, or have expanded into multiple locations and want to reduce their work hours or gain some ready cash.  Buying an existing single-unit franchise has its benefits.  Prices are often negotiable – whereas new franchises have set-in-stone fees – and the owner may be willing to provide special purchasing terms or even seller financing.

3. Multi-Unit Franchise
Some corporations sell their franchises in blocks rather than as single units.  For the parent company, this allows them to penetrate a given market without having to worry about finding a lot of different owners.  In a large metropolitan area, especially one where a particular brand is just breaking in, there can be distinct advantages to having more than one operational location.  This is especially true in retail, and fast-food restaurants are perhaps the most common example of this franchise type.  The franchisee will be granted the exclusive ability to operate within a given geographic area and pays a discount per location.  For example, if the franchise fee to open one spot is $45,000, the parent company may offer a price of $35,000 per location if the owner agrees to open a prearranged number of stores within a given time frame.  Also known as “sequential” multi-unit franchising, the franchisee opens one location first.  After everything is running smoothly and it can be determined that the public is clamoring for more, a second spot is selected.  When owning multiple locations, franchisees running multi-unit businesses generally spend less time involved in day-to-day tasks and instead manage at a higher level.

4. Area Developer
This franchise type is similar to the multi-unit operation, except that it takes place on a larger scale and oftentimes involves the opening of more than one spot at a time.  The area developer may be given an entire state or multiple states in which to operate, rather than a single city or portion of a larger metropolitan area.  As you might expect, this opportunity requires a significant amount of capital.  The agreement with the parent company will usually include a guarantee to open a certain number of locations, and the widespread nature of an area developer’s realm means he or she must hire some very reliable store managers to look after the daily requirements of the business.

5. Master Franchise
The owner of a master franchise is, in some respects, a miniature version of the parent company from which the initial franchise has been purchased.  In examples 3 and 4 above, even though one has multiple locations, each is under the direct control of the owner whose relationship is solely with the corporate office.  As a master franchisee, the corporate office actually cedes the right of control to the franchisee.  This means you have the right to create sub-franchises within your territory and receive franchise fees and royalties from them directly.  Some of this cash will flow to the parent company, but a master franchisee enjoys the greatest amount of profit potential since he or she controls a far larger operation.  Naturally, the cost to do so is equally steep and requires a major capital investment.  Many master franchises become corporations on their own, and some may even turn into public companies, with common stock bought and sold on the NASDAQ or similar exchange.

Looking to buy a franchise? We have 100s of Franchises For Sale and Business Opportunities. Check out our Franchise Opportunities and get FREE franchise information today!