Types of Franchises
There a four types of franchising opportunities available with varying levels of qualification requirements.
franchise participation. The Franchisee is awarded the exclusive rights to operate a single unit franchise in a specified geographic area. It could be a home-based business or have a physical location. The franchisee is typically a hands on operator of the business.
Multiple Unit Franchise - The franchisee owns and operaes more than one franchise unit. Units may be in random areas of your choosing. The franchisee is typically less involved with each individual unit; but manages the multiple unit operations.
Area Development Franchising - The franchisee will own an exclusive territory and will agree to a development schedule for the number of units they must open and operate. There is typically a significant reduction in franchise fees and possibly ongoing royalties. Area Developer franchisees usually have managers for each unit.
Master Franchising - Sometimes called a master or regional developer, a
master franchisee has the exclusive franchise rights in his or her area (usually a metropolitan area or even an entire state). He acts as the business development partner for the franchise company in his specific territory or region, i.e., a state, counties or metropolitan area. The master, in addition to opening franchises, sub-franchises (selling a single unit and multi unit franchises), keeping a significant portion of the franchise fee as well as ongoing royalties from the franchisees within his or her area. There may also be additional income available from distribution of products through the franchisees in the area. The master essentially becomes a franchisor in his or her own area without having the costs of the trial and error the original franchisor went through.
Absentee Investor - For the right kind of business, with the right employees running that business, it is possible to own a franchise business and not be directly involved in its day to day management. With this approach, you can keep your job and build equity and wealth toward your retirement years through business ownership.