Eight types of franchises with the highest rate of return

Are you thinking about starting your own franchise business in the UK? This business model is quite important in the country. Nowadays, there are hundreds of commercial franchises and if there is one thing for sure, that number is only getting higher.

According to the data, the amount of people who have a job due to a franchise has crossed the threshold of 621,000 which means an increment of 70% in the last ten years.

Without further ado, let’s look into the main types of franchises and their main characteristics so that you can choose the model that interests you the most.

Which are the most interesting franchises?

1.    Industrial franchise

The industrial franchise is one of the most common types of franchises. In it, a collaboration is established between the manufacturers.

This is how the franchisor is able to provide the franchisee with all the information needed on how to run a business, (the know how, as it were). The franchisor must also give the franchisee the manufacturing license rights to work with the brand, administrative proceedings, sales management, etc.

Most commonly, the franchisee only obtains the production rights for a part of the production process, and not for the entire production process.

The franchisee will also have a specific area in which to sell the product or service in question.

2.    Commercial franchise

The commercial franchise is the most common type of franchise that can be found in the market.

In it, the franchisor commits to delivering to the franchisee all the elements they need to be able to replicate the business elsewhere.

The franchise will dictate a model with guidelines that must be replicated. Every step of the way, they offer the advice needed for the business to move forward as well as acknowledging any doubts, problems, or inconveniences that may arise.

3.    Production franchise

In the case of the production franchise, the franchisor is in charge of manufacturing the product or products to be sold, and the franchisees are in charge of selling them.

This system is advantageous for the franchisors, since they are bound to purchase the products on an exclusive basis, which is detailed in the contract that has been signed. This allows the franchisor to ensure a certain sales rate.

However, there is no guarantee for the franchisee, since there is no guarantee that the end customer will end up buying the product.

4.    Distribution franchises

With distribution franchising, the franchisor becomes the central purchasing hub. 

Their role is to purchase products provided by other companies and provide them to the franchisees who are then responsible for distribution.

This type of franchise is common in the fashion or decoration fields.

In a way, there are some characteristics in common with the distribution franchise such as the franchisor ensuring a minimum amount of sales.

5.    Service franchise

The main difference between a service franchise and other types of franchises is that it operates with a service or a set of services.

Following the aforementioned know-how, the methodology will be set by the franchisor. 

The particularity of this franchise model is that it requires a more exhaustive control by the franchisor. They are responsible for supervising that the method applied is correct.

Some examples of service franchises are healthcare and courier companies.

6.    Combined franchises

Mixed franchises combine the properties of a product franchise with those of a service franchise. Here we may find companies operating in the hospitality sector.

7.    Shop in shop franchise

The Shop in Shop franchise is based on the creation of small spaces focused on different brands, all of which are located in the same establishment.

The particular feature of these spaces is that they share the same image and decoration as the brand's main store.

Think of it as a bunch of systems of small stores within one bigger store.

8.    Corner franchise

Lastly, we have the corner franchise.

This is based on implementing a type of commercial activity in an existing establishment, which is already operating, and its activity is related to that of the franchisee.

However, within the establishment a small, well identified, and marked space may be allocated.

There are many advantages to a corner franchise, among them, its formula for saving costs.

If you are thinking of setting up a franchise in the UK, or elsewhere in the world, we encourage you to learn about the main types in detail.