5 Ways to Franchise Your Brand in 2023

Retail and eCommerce consulting brand - Your Retail Coach in this communiqué shares the developments of its ongoing assessment of modern franchising solutions. The insights shared here are intended for business owners who want to use the franchise expansion strategy ( https://www.yourretailcoach.in/franchise-development/ ) for growth in business and revenue. The solutions shared here reassess conventional techniques as well as shed light on emerging models.

FOFO (Franchise Owned Franchise Operated)

In the FOFO business model ( https://www.yourretailcoach.in/business-model-development/ ), a franchisor (usually, a reputed brand in the context of franchising purposes) allows another entity (a franchisee) to start and operate the same business under the banner of the former. The franchisor sells out the right to use the brand name of its business and logo/trademarks to an interested and eligible franchisee. While franchisors get a fee or remuneration in any other agreed form as a consideration, the franchisees get a ready-made platform to kick-start business under the banner of a reputed brand and start earning revenue. Although the cost of capital and operational expenditure is borne by franchisees, they are bound by certain terms and conditions set by franchisors to protect their brand name.

Franchisees get to readily implement a proven business idea that lowers their business risks if the market assessments and business planning are done right. The general challenges are already known to franchisors which makes the business journey smoother for franchisees.

However, the FOFO model also has some demerits. There are a myriad of reasons why franchisors may choose not to renew the franchising licence. It puts the efforts and investments of franchisees at high risk. The margins can be quite restrictive for franchisees because franchisors have a say on the pricing caps including considerations for local adjustments.

FOCO (Franchise Owned Company Operated)

In FOCO, the franchised business is owned by the franchisee but the operations of the business are managed by the franchisor (the company). This means the franchisee makes the investments to set up the business which the franchisor will manage. This is a more controlled, less risky route for franchisors. They retain absolute control over the operations without making set-up investments.

Here, the franchisee owns the business and its assets but operational responsibilities and costs are taken care of by the franchisor company. Franchisees get a minimum guarantee of revenue or share in profits or any other form or combination of remuneration as agreed by both parties.

This model is useful when market opportunities are present but the skills and expertise required to run the business are sophisticated and cannot be easily acquired or developed. FOCO is also applicable when a franchisor wants to retain absolute control over the operations. If everything goes well, franchisees are assured of a fixed income. From the perspective of franchisors, they can access new markets without making localised capital investments. Anything over and above the pay-out to franchisees and operational costs is profit to franchisors.

COFO (Company Owned Franchise Operated)

COFO is quite the opposite of FOCO. In FOCO, a franchisee makes the capital investments and the operations are managed by the franchisor company. In COFO, the franchisor company makes the investments required for setting up the franchised business ( https://www.yourretailcoach.in/franchise-development/ ) and the responsibility of operations lies with the franchisee.

One relevant case for the COFO model is where business operations do not involve any sophistication or specialised skills or expertise. For example, a car rental company can adopt this model. They can set up their office in a new location and let a local business entity (with necessary resources) manage the operations. Even in COFO or any other franchise model for that matter, it is only natural to expect that franchisors would never let the grasp over quality control go out of their hands.

Franchisees need not make any capital investments but there is a subtle precondition involved. In COFO, franchisees must possess the required operational skills and resources. This need not be on absolute levels because these capabilities can be augmented by a franchisor company in applicable ways.

Active Franchise

Active Franchising is a relatively new concept in the domain of franchising, especially when compared to the other popular franchising business models. In this model, successful brands with multiple outlets or stores sell the right to run the business of some of these outlets to franchisees. For example, a local departmental store with multiple branches in a city may decide to franchise one or more of these branches to franchisees. All other principles and rules of franchising apply in this model too. Quality control is one of them. The pattern of sharing of risk, revenue, ownership and control is also determined.

Franchisees need to evaluate the market and business prospects before taking up an active franchise. They should prudently examine the financial and commercial performances of the franchise store(s) in question. Like in other models, franchisors need to exercise caution in the selection of franchisees in active franchising too. Giving away successful outlets to existing or potential competitors could be a disastrous move. Active franchising is a suitable option for small businesses with a limited number of people at the helm of affairs to oversee business. It is also relevant to situations when succession plans are not ready yet. Sometimes focusing on new business lines could also lead to the adoption of active franchising for the existing business line.

DIY Strategy

It must be understood that franchising is a 'working arrangement' between two entities - the franchisors and the franchisee. It can be shaped and structured howsoever these two entities intend to as long as it is within the ambit of law. And most importantly, there are mutual benefits involved. It is possible that no pre-existing model of franchising might fit into the requirements desired by a franchisor or a franchisee. As franchising consultants, YRC maintains that such situations are becoming increasingly common. Today, more and more businesses are turning to franchise business consultants ( https://www.yourretailcoach.in/franchise-development/ ) for customised and improvised franchise strategies.

YourRetailCoach
Pune, India-411016
Phone: +91-9860-426-700
Email: consult@mindamend.net
Empowering Retail & E-commerce businesses worldwide.

YRC is a Management Consulting Company, especially for the B-C Sector.

Get advise for Retail Business Consulting : https://www.yourretailcoach.in/contact/

This release was published on openPR.