Varieties Of Franchises; An Overview Lloyd Shears Several editions ago, I did an article called "Franchising ... More Than French Fries." It prompted more calls to my office with people saying "I had no idea there were so many types of franchises", and "Thanks, can you tell us more?" than any other feature, so I decided to devote an entire article to information on the 4 main types of franchises. They are Food, Automotive, Retail and Service, which we will break down into Business to Business Service and Personal Service. Perhaps more than any other sector, we will be familiar with the food industry. And how could it be otherwise. After all, there is a food franchise on every corner. The television and radio carry ads almost constantly, as if there was any chance that we could forget. Interestingly enough, this explosive growth has taken place in the past 20 years. Shopping malls have entire food courts devoted to food franchises, and a drive, through any suburb, reveals almost countless fast food outlets lined up, and competing for our dollars. The food court franchises, in hundreds of malls across Canada and the United States, tend to have rather simple menus, and be reliant on mall traffic. Of course, with virtually no mall construction in Canada in recent years, there is a lack of availability of this type of location. The streets play host to an even increasing number of submarine sandwich shops, and bagel outlets, with long hours of operation. And, there are the full service sit down menu places, and the fast food burger restaurants so abundant across the country. The purpose of this article is to bring attention to the types of franchises, and nothing else, but I think it fair to mention that the food industry is generally considered highly competitive. Also, if you have the demands of a young and growing family, the hours needed for success in some of these businesses may not be attractive to you. In terms of costs, it is unusual to find a food franchise under $100,000, and more often, expect the costs to be $150,000 plus, with many of the larger restaurants costing up to $1,000,000. The automotive industry is largely dominated by franchising. In fact, the automotive industry was one of the first to use franchising to expand. Chances are, the car dealerships in your city are franchises. Probably the gas stations, as well as the oil, lube, filter, muffler, break, and tune-up outlets. We are much more environmentally conscious than past generations, and are keeping our cars longer. This has given rise to an ever expanding auto "after service" market. In addition to the above mentioned types of auto franchises, there are of course the franchises which repair cracked windshields, paint chips, upholstery and vinyl repair, pinstriping, and I am certain others that will appear as the market place shows a need for them. For many of the smaller franchises in automotive, be prepared to do the work yourself, at least initially, as you build the business. Many of the larger franchises, where you can grow the business into multiple franchise ownership, will be interested in business people who want to run a big business, rather than being mechanically, or technically inclined. They will want business people who will hire the mechanics and technicians, leaving them time to run the operation. Again, there are many businesses devoted to the automotive field. So, competition raises its head. Still, I am told by industry experts, that there are segment in the automotive industry that have ample room for growth,and will continue to be strong, supported by the changing industry standards relating to the environment. Rest assured, we are not about to abandon our cars anytime soon. Automotive franchises requiring a retail location are going to be more expensive than the auto/service franchises. Expect the automotive franchises with retail locations to generally be $100,000 and up, while the service type (paint repair, windshield crack repair) which will be operated from home and a van, to start at about $20,000. Retail has been around as a franchise for a very long time. In fact, the first retail franchise was sold in Germany in 1851 by the Singer Sewing Machine. They also credited with selling the first franchise in the United States in 1852, and in Canada some years later. It was their method of getting their goods to market. Franchising is a method of distribution. Retail and franchising go hand in hand. Upscale cosmetic shops, gourmet coffee, gift and kitchen stores, and even resale outlets for used goods. Today I spoke with a representative of a chain of franchised used computer stores, who was extremely proud to tell me their average store does over $1,000,000 in sales in the second year, and some outlets were approaching the $3,000,000 mark. Armed with this success, and no lack of people seeing the opportunity, they are very quickly expanding through the North American markets. Retail appeals to a particular type of prospective franchise. It is ideal for someone who likes the idea of a place to go in the morning as opposed to working from home. It may also be well suited to someone who is extremely comfortable with the idea of a consultative sale ... they like the idea that a customer will come to them. They are quite comfortable with helping the customer in their store, but would perhaps be less comfortable in a situation where they went to the customer asking for a sale. Selling a product is consistent with the desires of many people. We see ourselves being comfortable in customer service. Retail also cuts across into the service industry. By way of example, a dry cleaning or hair care franchise, would be considered service/retail, as it needs a location like retail, but provides a service, rather than a product. The service industry will generally be the types of franchise we will know the least about. Also, service businesses will tend to be less expensive to invest in, and provide the best return on our investment. Remember, the amount we invest, will not necessarily dictate the amount we are going to make. With some exceptions, businesses in the service industry will cost $20,000 to $80,000. Business to business service franchises are frequently also referred to as "white collar" franchises. They often involve providing a service to a company, and the need to meet with the company's upper management. These franchises are usually bought by middle to upper management types, who have been "let go", "outplaced", "given the golden handshake" (or whatever the current term for being separated from your employment) by their companies. Determined to never be in that position again, they buy franchises where they will continue to work in the same kind of business environment, as they did in corporate life. One such franchise that comes to mind, is a company where the franchisees are involved in selling sales and motivational seminars and training video's to large companies. Their average franchisee makes over $200,000 a year, and the total investment is perhaps in the range of $70,000. Personal service franchises are generally in the business of providing service to people in their homes. A perfect example would be a "maid service" franchise. These franchises are set up to again appeal to the business person, who will train staff to do the actual cleaning, while they run a business. Of course countless other examples come to mind, in this ever growing industry, catering to the fact that most households have 2 working spouses. Two working spouses, frequently means no time to cut the grass, clean the house, weed the lawn, but the resources to pay someone else to do it. There are also companies which are both "business to business", and "personal service". One example would be a well established carpet dyeing franchise. They supply their services to many businesses...hotels, motels, apartment and office buildings, as well as homes. This is really a small sample of the entire industry. However, I do hope it serves as an aid in helping you see franchising as the huge and diverse industry it is. Remember, it will take 20 to 30 hours to research a franchise company over a 4 week period. Only then will you know if a company can meet your needs and the needs of your family, or not. NOTHING WILL HAPPEN UNTIL YOU TAKE ACTION.