Finding the Best Business Structure for Franchises of All Shapes and Sizes

Your franchise format is the skeleton of your business. It keeps all your franchises marching upright and moving forward as they should.

Your franchise format is the skeleton of your business. It keeps all your franchises marching upright and moving forward as they should. There is no perfect model, only the ideal one for your goals. What’s good for Wendy’s can be catastrophic for 7/11, so this is one of the most important franchising decisions you’ll ever make.

The Best Business Structure for Franchise Restaurants

The contemporary definition of franchising refers to business formats. They’ve become the hallmark of the modern industry for their structured management and capacity to achieve uniformity across thousands of outlets. The franchisor provides its trademark product in exchange for a structured marketing and production strategy. McDonald’s, Pizza Hut, and Burger King have all gained prominence through this structure. Franchisors provide advertising, recruitment, location advice, and even raw products to each outlet, so success is within reach of even the most inexperienced franchisee. Micromanagement comes at a price, of course. You’ll need to provide training and support to every business beneath your brand, but that takes considerably less work than fixing PR crises caused by ailing franchisees.

Regional Master Franchises

If you’re looking for a franchise format that doesn’t annihilate your vacation time, a regional master franchise might serve you well. Here, each franchisee can sub-franchise to others, gaining operational control of their region.

The Best Business Structure for Franchise Product Developers

best business structure for franchise

A business format might apply to 80% of America’s franchises, but product distribution is the oldest format in the industry. It will keep the blood pumping between your suppliers and customers, but if you’re product-centered, it might push your brand onto all fours or even steal its legs entirely. 

If micromanagement warms your carefully-branded soul, you needn’t offer it. Product developers with a passion for research and development once ruled the franchising industry. Their format is still being used today, albeit at a smaller scale. Product distribution formats allow you to nurse your supplier/dealer relationships in a hands-free way. Here, the franchisor offers a trademark, license, and logo without the day-to-day management typical of fast-food outlets. E-commerce has opened up new channels for product distribution, allowing brands to source new franchisees on a massive scale.

Management Franchise Formats

If you provide services rather than retail products, a management franchise follows closely behind the product distribution format. The structure is equally hands-free, allowing franchisees to take ownership of their outlets and exercise their entrepreneurial flair.

Joint Venture Formats

If your brain is built for management strategy, a joint venture format might be the best business structure for franchise businesses beneath your banner. Much like business formats, you control your franchisees contractually, but with the added influence of a joint venture. This way, you gain an extra layer of control, along with equity interest. If you’re starting a new franchise, this format will lower your entry level, offering the option of a strategic buy-out at a later date.

Best Business Structure for Franchise Converts

If you’re an acquisitionist at heart, a conversion franchise will let you play out your passions on a grand scale. Instead of setting up a new business, you’ll recruit established brands into your network or convert your own into a franchise. You’ll get to benefit from tested businesses and gain their established brand power.

Franchising essentially reproduces a clone of a successful brand, so it opens up a wonderland of opportunity. You don’t need to take the same route as the majority to reach the top of the mountain, though. Your format will adjust to your strengths and allow you to build a strategy that fits you as snugly as a tailored suit.