Types of Franchises

There’s three of them:

1) Distributorships. Gives the right to sell products.
a. Example: Auto Dealers.

2) Format Systems. Gives the right to operate a business using the franchisor’s name and methods.
a. Example: Fast food restaurants.

3) Manufacturing or processing arrangements. Uses franchisor’s formula or ingredients to make and distribute products.
a. Example: soft drink bottlers.

A franchise can come with of a territory or just one location. Franchisees can pay fees for advertising, overhead, and so on. All of this is spelled out in the franchise contract.