In this article, we examine the different types offranchise ownership. Franchising has proved to be extremely popular in the UK, with approximately 1,000 franchise systems employing over 621,000 people. Research has also proven that franchising is a safer bet than a start-up business. There is a franchise model to suit all budding entrepreneurs looking to take advantage of the thriving UK franchise industry. Take a read of the various types of franchise ownership below to see which one suits you!
Single Unit Ownership
Single unit ownership is the perfect route for first time franchisees to get familiar with the franchising process. These franchisees are also known as owner-operators since they open and operate just one unit of the franchise. They are extremely involved in the running of the business and gain great hands-on experience during their day-to-day supervision. In most cases, a small group of employees assist the franchisee in most aspects of the business, except for management. However, for small single-unit franchises the owner may be the only employee, particularly in home-based franchises.
Within the single-unit category you can make a further distinction: is it a new or existing single-unit franchise? There are slight differences between the two. An existing franchise is known as a resale and in this type of business the marketing, set up and other miscellaneous activities have been done for you. The price of an resale franchise is often negotiable. A new franchise needs a location, marketing and training for all staff, among many other things.
Multiple Unit Ownership
A multiple unit license is when you open more than one franchise of the same concept in an area. The easiest way to think about it is that it’s rather like buying blocks of the same franchise. With this level of ownership, you have more of a managerial role rather than being heavily involved in any one aspect of the franchise. The franchisee manages all the units at a higher level. Usually, the franchisee will hire managers to perform the daily duties. Multiple units are usually sold at a reduced rate per unit. Although the overall initial investment is higher than opening a single-unit, the risk is generally lower as more units increases the chances of success. The multi-unit franchisee has more input and interaction with the franchisee, which is beneficial for both parties.
Area Development License
Like the multiple unit option, you open more than one location.
This is similar to the multiple unit option except it takes place over a much larger area, for example a county or large metropolitan area with several units. It also involves the opening of more than one spot at a time. This option requires a large amount of capital and will require the hiring of managers to look after the daily requirements of the business. It is a good option for anyone with significant time and investment to dedicate to the business.
Master Development License
A master franchise can be thought of as a miniature version of the parent franchise.
As a master franchisee, you can create sub-franchises within your territory and receive franchise fees and royalties directly. This allows you to purchase the rights to sub-franchise in a certain territory. This is normally offered by new franchise concepts that want to expand quickly. In this option, you are operating two distinct businesses: the franchise business and the franchise development operation.
There are many different types of franchise ownership and each one has something unique to offer.
Check out the latest franchise opportunities available right here!