- Fantastic Team
- 5min read
- Published: July 7, 2020
- Views: 268
Franchise Types & Structures Explained
Contrary to popular belief, franchising as a business model has been around for quite some time. While a large portion of the world believes McDonald’s are the pioneers of franchising, they really aren’t.
At its most essential form, franchising is the granting of rights from one establishment to another for a given area. Lords used to grant rights to individuals to maintain order in markets and perform business activities there.
Jump a couple hundred years into the future and Ray Croc joined McDonald’s and built the business into the global franchise it is today.
Yet, franchising as a business model has grown, changed and adapted quite a lot in the last few decades. More complex and improved franchise structures have appeared, and many businesses, like we at Fantastic Services, believe that franchising should be a mutually beneficial relationship.
Now, what are the most common franchise structures and what rights those franchisees have?
Franchise models are specifically designed to allow local businesses to grow into global conglomerates. Inherently, they come with complex structures that are hard to understand by people who aren’t familiar with franchising. A basic franchise structure consists of three franchise levels:
Commonly referred to as “AD”, area developers are franchisees that have the rights to develop and sub-franchise units in a designated geographic area. Franchisors often call those multi-unit, area franchise, or even regional developers.
As area developers, multi-unit franchise owners have the responsibility to establish the brand, grow the demand, provide and train on-location workers in the designated area.
Unlike area developers, area representatives have the only responsibility to support third parties entering into franchise agreements. In some cases, the Area Representative and Area Developer functions can overlap.
You can also regularly hear the terms regional developers or development agents. It’s basically the same thing.
Sub-franchisors have the ability to sell franchise rights to third parties in a designated territory.
Simply put, they are the franchise right holder for a city, county, or a whole country! Outside of the United States, sub-franchisors are often called “Master Franchises”.
While many companies operate using the above-explained franchise structures, they’re often not enough to support modern, agile businesses.
When we went into franchising, Fantastic was a rapidly growing, fast-changing company that could not survive with an old school franchise structure like that.
That’s why we went on to create our own franchise structure that would benefit our franchisees, customers and future goals.
You can’t put a technology-backed franchise into a business structure originating from the Middle Ages and pioneered in the 1950s. It just doesn’t work.
We set out to create three franchise types, that would create a franchise structure suitable for our business needs.
Our Master Franchise (or if you’re from the US — sub-franchisor) franchisees hold the rights to sub-franchise our brand, know-how and technology in their country.
They’re responsible for everything — from building the Fantastic brand in their country to creating a back-end support centre to meet the demands of the franchisees below them in the structure.
To explain it simply, we (the franchisor) hold the franchise rights for the United Kingdom. We’re responsible to provide sales, marketing and technology support to our franchisees throughout the UK.
Likewise, our area developers are the franchisees that own the franchise rights for a given area within a country (let’s say a city or a county). They have the responsibility to develop the market in their area.
Let’s break down our Area Development franchise by taking a look at Ivanka Obreshkova’s Oxford area. Since she started working with us she grew from just a single-team to 30+ teams under her management.
Ivanka is responsible for the seamless delivery of service in Oxford and a few other areas. She takes care of the expansion of her business, while we collaborate on marketing campaigns and help her with sales and technology development. That way Ivanka just has to focus on what’s important to her — growing her business.
Our smallest franchise unit is our working franchise. We had to create something that could accommodate the large number of people who aren’t interested in managing 30+ teams. A lot of people in our niché just want to work for themselves, often by themselves.
Our working franchisees are responsible for providing services on-location. They are the gardeners who love the smell of freshly mowed grass in the morning, and the cleaners who aren’t satisfied until every dirty spot on the carpet is removed.
Likewise, working franchisees don’t have to worry about marketing or sales or business development. Just like area developers, they benefit from Fantastic Services’ know-how and experience.
In our quest to create a franchise structure to accommodate the full spectrum of businesses, we believe we made something that’s not solely focused on growth.
Rather than chasing vanity metrics, we aim to support small, local businesses and communities first. We want more local ventures to provide jobs and train people. And we want to set an example of how a business shouldn’t be run on numbers and spreadsheets and growth-hacking, but rather support, encouragement and empathy.
While we are nowhere near the size of McDonald’s or Anytime Fitness, we believe and know our franchise structure builds wealth in every area we operate.
And if that sounds good enough for you, we’d love to hear from you! 🙌Contact Us
Posted in Starting a Business
Fantastic Services manages 25+ professional home cleaning and maintenance services, provided within the UK, Australia and the USA. With 10+ years of experience behind our back, and 400+ of successful franchises, we continuously set the bar higher with our cutting edge technology implementation and marketing approach. Explore our business opportunities on the main website!