Business Format Franchise: What Does it Mean and What are the Benefits?

A business format franchise is the most common type of franchise. Learn more about how it works.

Different Types of Franchises

Before we learn what business format franchising is, it’s important to first understand the additional types of franchises that exist you might encounter:

• Product distribution franchise: This model is akin to a supplier-dealer relationship. You sell the franchisor’s products, but you’re not obligated to follow as many guidelines or to use their systems and processes. Some well-known product distribution franchises are Exxon, Texaco, Goodyear Tires, Ford, Chrysler, John Deere, and other automobile producers.
• Manufacturing franchise: Manufacturing franchising is defined as the granting of a license by the franchisor to the franchisee, entitling them to customize, manufacture, market, distribute and/or support goods and/or services, whereby the franchisor agrees to provide central commercial and technical support.
• Business format franchise: With this type of franchise, you buy into a brand and a proven system of doing business, gaining access to a complete blueprint for running the business. Names like McDonald’s and Subway might pop into your head; they’re prime examples of the format. Under this model, franchisees will pay fees to use the trademark, products, and services exclusively held by the franchisor.

The Advantages of the Business Format Franchise

Under a business format franchise arrangement, the franchisor offers a detailed plan – a comprehensive method of operation, including a marketing plan, the operational processes, and a shared system for execution. The allure of it lies in its structured system. Here are the benefits:

• Brand recognition: You’re acquiring a name that customers already know and trust.
• Proven systems: There’s a playbook for success. With a tried-and-proven model, the guesswork that many entrepreneurs face when launching independent businesses is taken out of the equation.
• Training programs: Comprehensive franchisee training is typically provided, ensuring you and your staff can maintain brand standards and consistent quality across locations.
• Ongoing support: Expect continual assistance from the franchisor, which can include marketing, new product introduction, and operational guidance throughout your career with the brand.
• Network of franchisees: You’re never alone. A network of fellow franchisees can offer advice, support, and camaraderie.
• Lower costs: You may be able to anticipate lower product and operating costs thanks to the brand’s collective buying power.

Potential Downsides

No investment is without its potential drawbacks, and this type of franchise has a few to consider:

• Initial investment: The entry price can be steep due to the established brand and turnkey operation.
• Royalties: Profits are shared with the franchisor through ongoing royalty fees.
• Less freedom: Adhering to a franchisor’s well-rooted guidelines means your entrepreneurial freedom is limited, but the best franchisors are often open to feedback and collaboration.

Other Things to Know

If your interest is piqued and you’re gearing up to step into the role of a franchisee, here’s what you need to arm yourself with:

• Understand the franchise disclosure document (FDD): This legal document outlines everything about the franchise, from fees to legal issues. It’s the franchise bible, so study it religiously.
• Location, location, location: The right spot can make or break your franchise. Research and choose wisely.
• Capital: Ensure you have enough capital not just for the initial investment but also for the ongoing expenses until the franchise becomes profitable.
• Due diligence: Investigate the franchisor’s track record, financial health, and reputation within the franchisee community.
• Legal and financial advice: Never go at it alone. Seek professional advice to navigate the complexities of franchise agreements and financial planning.

Consider Franchising with Vicious Biscuit

The Vicious Biscuit franchise opportunity embraces the business format franchise model while also offering an attractive ground-floor opportunity. We consider ourselves a franchisee-first franchise, and we make it our business to help you run your Vicious Biscuit locations to their full potential. Our franchisees will be backed by a leadership team that has a combined 65+ years in restaurant operations within prominent franchise chains, and our partnership with emerging brand accelerator Pivotal Growth Partners, who’ve led some of the top food-service brands to award-winning growth. Additionally, we’ve streamlined our processes to ensure operational simplicity and efficiency and built a robust digital and hands-on-training program to ensure success every step of the way. Our model is built on the foundation of shared success, offering comprehensive training, ongoing support, and a collaborative community. This approach not only facilitates a smooth entry into the fast-casual industry, it also empowers our franchisees to seize the opportunity for rapid growth, leveraging our proven systems and strong brand recognition to achieve outstanding results.

Ready to get started? Learn more about our franchise opportunity today.