The Most Popular Types of Franchise Today
The franchise is a commercial activity whereby the franchisor permits and requires the franchisee to conduct the purchase and sale of goods and provision of services by himself.
Franchise by territory
Franchising by territory has several forms as follows:
- Domestic Franchise: Vietnamese brands have now also begun to develop franchising activities between new businesses, usually between large enterprises and newly established enterprises…
- The franchise from abroad to Vietnam: This is the form in which foreign brand owners invest in Vietnam in the form of franchises. Some famous brands can be mentioned such as KFC, ADIDAS, Nike, etc.
- Franchising from Vietnam to abroad: Currently, there are famous brands in Vietnam that have been franchised to other countries, including brands such as Trung Nguyen coffee, Pho 24, etc.
Franchise based on business criteria
According to business criteria, there are several forms of franchising as follows:
- Product distribution franchising: This is a form in which the franchisor allows the franchisee to distribute the products he produces or the services he provides within a certain scope and time. However, the licensee is only allowed to use logos, brand names, slogans, logos, etc. in business activities, promoting products and services.
Some brands have been franchised for this form such as coca-cola, Ford car company, etc.
- Franchise using business formula
Currently, this is considered the most popular form of commercial transfer, also known as a business franchise. Accordingly, the franchisor not only allows the franchisee to distribute products under their brand name, but also to transfer business techniques, business management formula, and support that give the employees of the franchisee basic requirements and skills.
Franchise according to business development goals
Franchising for business development has the following 4 forms:
- Exclusive Franchise: A form of franchise purchase, in which the buyer is allowed to re-franchise in a specific area or territory and commit to developing the number of franchisees in each period specified with the seller. The buyer of a master franchise can transfer it to a third party in the form of an Area development or a single-unit franchisee to sign a new contract with the same content as the seller. In this form, the buyer is not allowed to re-franchise.In this form, the brand buyer must actively seek customers and develop the brand in the future. its area.
- Regional Franchise: This is a form where the buyer of a regional franchise will receive one from the brand owner or the master franchise buyer to resell to the single-unit franchisee in the region. I bought with the terms as agreed with the franchisor. This form is like an intermediary between a master and a single-unit franchisee. The difference between this form and the master franchise is that only single-unit franchisees can be re-franchised, but are not allowed to open their own branded stores.
- Franchise area development: In this form, the seller has the exclusive right to open many business units (quantity as committed with the seller) in a certain area, territory, and specific time. Buyers in this case are not allowed to sublicense. They will have to commit to opening how many franchises in a certain time. If they want to sell it back to a third party, they have to buy it in the form of a master franchisee and the franchisee has to pay a large fee to have the exclusive right to open franchises in a certain area of time.
- Individual Franchise: The buyer signs a contract directly with the seller (as the main owner or master franchisee) to open a business unit under the seller’s franchise system, at a certain location, and for a specific time. After this time, the contract can be renewed and the franchisee must pay an additional fee. Buyers of franchises in this form cannot assign them to a third party or arbitrarily open more stores with the same brand. Therefore, retail franchisees can usually only buy through master franchises (for well-known brands) or small brand owners. Typical examples such as KFC, Jollibee, Loterria, and McDonald’s, through this form to franchise in Vietnam.
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