Product franchising: In product franchising, the franchisee receives goods from the franchisor under preferential conditions for their subsequent sale. At the same time, they acquire the right to sell and service under the franchisor's trademark. Usually, the franchisor itself acts as the manufacturer of the goods. Unlike dealership agreements, within agreements on product franchising, requirements for sales technology and conditions for using the trademark are detailed, and restrictions on the sale of competitors' goods are established. Examples include most networks in the retail sector, such as clothing, footwear, accessories, everyday goods, and food products.
Service franchising: Service franchising differs from product franchising in that the franchisor provides the franchise not for the sale of goods but for the provision of specific services under its brand. The most common areas of service franchising include services in the following sectors - education and entertainment for children, additional education, care for the elderly and children, cleaning, travel agencies, real estate agencies, beauty and wellness salons, and fitness centers.
Manufacturing franchising: Manufacturing franchising is a relatively rare type of franchising in which the franchisor transfers patented technologies and raw materials to the franchisee for the production of a specific product. Typically, the franchisor manufactures and supplies certain ingredients to the franchisee, with production technology not being disclosed. In this case, the franchisee sells goods under the franchisor's trademark that they produce independently. This type of franchising is most common in the production of non-alcoholic beverages. Practically all enterprises engaged in bottling and packaging products under trademarks such as "Coca-Cola," "Pepsi," and others operate within the framework of manufacturing franchising.
Business format franchising: Business format franchising involves the franchisor transferring not only the right to use the trademark but also a developed model of business organization and management to the franchisee. Business format franchising implies the compilation by the franchisor of an extensive package of accompanying documents - the so-called Business Operation Manual, which includes detailed business operation technologies and rules, up to the parameters of working with real estate (location, intensity of human traffic, range of rental rates, etc.), interior decoration, lighting, furniture arrangement, appearance of employees, specifics of working with suppliers, advertising policy, etc. A characteristic feature of business format franchises is the presence of a detailed financial model, based on which the franchisee can plan and build their activities. As a result, the franchisee becomes fully identified with the franchisor and effectively becomes part of its overall corporate system.
Conversion franchising: Conversion franchising involves the development of a franchise network by providing franchises to companies/entrepreneurs already operating in this segment. The consolidation of such franchises into one network allows for the effect of joint development of a single brand, as well as saving on the economy of scale by jointly using common resources, receiving additional privileges from suppliers and contractors.
Reverse franchising: Reverse franchising is a relatively new type of franchising relationship in which the franchisor provides maximum support to its franchisees by investing in the opening of their outlets. In this case, revenue from end consumers goes to the franchisor, who then transfers part of this revenue to the franchisee as compensation.
