According to The Franchise Council of Australia, franchising is a $182 billion sector with over 80,000 franchised businesses. But every franchisor has a different franchise business model, so how do you choose the one that’s right for your personal and professional needs?
You need to do your due diligence to determine which model best suits your strengths. Do you want to work in your business or have others working for you? Do you want multiple franchises or a single unit?
We’ve created an easy Franchise Business Model PowerPoint (PPT) designed to give you a big-picture overview of the different franchise business models on the market. You can download it at the bottom of this article; but before we get there, let’s delve into the definition of franchising.
Franchise business model definition
Put simply, a franchise is a way of doing business. It’s a trademarked business formula that one company (a franchisor) owns and offers for sale to others (franchisees) to run as a small business for a set time period.
In short, as a franchisee, you run your own small business. However, you get to use the franchisor’s processes, raw materials, and all their marketing collateral, such as logos, slogans and signage.
Let’s look at some of the typical business areas and operations that a franchisor can help you with under this model:
- negotiating better supplier rates through bulk buying
- negotiating a lease to help get your franchise business off the ground
- providing marketing and technical support
- supplying complete training that combines classroom learning with hands-on, in-store work alongside an experienced franchisee.
The franchisor gives you this support in return for a flat initial fee, plus ongoing fees (royalties) based on your profits or sales.
The four types of franchise business models
- Manufacturer-Retailer: This model is defined as a franchisee selling the franchisor’s product straight to the public, and is common in new motor vehicle dealerships and petrol stations.
- Manufacturer-Wholesaler: This model is one where a franchisee manufactures and distributes the franchisor’s product under licence, for example, in soft drink bottling arrangements.
- Wholesaler-Retailer: Here a retailer (franchisee) buys products from a franchisor wholesaler, then offers them for sale. Often, the agreement contractually requires the franchisee to buy from that wholesaling company. This is commonly seen in hardware stores.
- Retailer-Retailer: This model lets the franchisor market its products or services through a network of franchisees. As part of the deal, each franchisee must use a common name and a standard set of systems and processes. You often see this model in Quick Service Restaurants (QSRs), such as Red Rooster, and is the model people most commonly think of when they think of ‘franchising’.
Red Rooster: a great example of the Retailer-Retailer franchise model
Red Rooster is a QSR franchise brand that breaks the mould. As a ‘challenger brand’, we can go super-local and make a real impact in our franchisees’ communities. That makes our model the perfect one for franchisees who care about their community.
Most QSRs in Australia use a Retailer-Retailer franchise model because of the consistency it creates across all locations. This model also allows for top-notch head office support – everything from managing contractors for a new store to planning out opening and after-launch promotions. As a result, your store opening – and ongoing business – is more likely to be successful.
The Franchise Business Model Powerpoint
Red Rooster has a rich history as Australia’s largest home-grown QSR brand, and we’re the only one that specialises in roast chicken. We opened our first restaurant in 1972 in Kelmscott WA, and now have over 360 restaurants across suburban, regional and rural Australia.
Let’s take a look at the Red Rooster franchise business model in the PPT below:
We love owner/operator franchisees
At Red Rooster, we believe that successful franchise businesses need owner/operators to run their stores. When an owner works in their store, they can showcase best practice to their team members. They can also make decisions on the fly, personally motivate their team and respond to situations as they happen.
A franchisee who spends time in-store can experience first-hand the fast nature of the industry and the changing needs of their customers. This means owner/operators can usually run their franchise business at its optimum level.
Things to keep in mind
Unlike more independent business models, a franchise business needs to represent the main franchisor’s brand. This means that if you’re a franchisee, your franchise agreement will require you to operate using your franchisor’s standard procedures.
Each store across the franchise needs to present itself the same way to customers. This means it needs to offer the same product and service quality, the same messaging and the same customer experience.
It’s therefore essential to consider how much control and individuality you want in your business, as there’s little room to change the way a franchise business operates. Of course, the advantage is that you don’t need to change anything. You’ll have tried and tested processes already in place to help your business succeed.
Is the Red Rooster franchise business model right for you?
There are many advantages of franchising as a business model. However, as with any other investment, it’s essential to do your research and find a brand that works for you.
Want to find out more about becoming a Red Rooster franchisee?
Get in touch today!
Our Franchising Team is here to help:
- QLD, NSW, ACT and TAS – Manal Haydar – manal.haydar@craveablebrands.com – 0477605463
- VIC, WA, SA and NT – Leisha Fontana – Leisha.Fontana@craveablebrands.com – 0408927750