Business Format Franchise: How It Works & What Makes It Profitable

What is a business format franchise? Learn more about this type of franchise and why it's a smart business opportunity.

As you explore the terrain of franchising, you might find yourself inundated with options and varying business models. Learn more about this type of franchise and why it’s a smart investment opportunity.

Different Types of Franchises

Before we delve into the specifics of business format franchises, it’s important to recognize the broader categories 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: Here, you’d be manufacturing the products using the franchisor’s brand name and formula or production method. 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: This is the goldmine we’re focusing on today. In this format, you buy into a brand and a proven system of doing business, gaining access to a complete blueprint for running the franchise. Names like McDonald’s and Subway might pop into your head; they’re prime examples of the format. With this type, franchisees will pay fees to use the trademark, products, and services exclusively held by the franchisor.

Business Format Franchise Advantages

Under this type of franchise arrangement, the franchisor offers a detailed plan – a comprehensive modus operandi of the brand, including the marketing plan, operational processes, and a shared system for execution. The allure of a business format franchise lies in its structured system. Among 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 proven model, the guesswork is gone that many entrepreneurs face when launching independent businesses.
  • Training programs: Comprehensive 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 tenurewith the brand.
  • Network of franchisees: You’re never alone. A network of fellow franchisees can offer advice, support, and camaraderie.
  • Lower costs: The franchisee may be able to anticipate lower product costs and operating costs thanks to the brand’s collective buying power.

The Down Side

Every investment includes challenges, 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: Gross sales 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.

Here’s What You Need to Know

If your interest is piqued and you’re gearing up to step into the franchisee life, here’s what you need to know:

  • Understand the franchise disclosure document (FDD): This legal document outlines everything about the franchise, from fees to legal issues.
  • Location, location, location: The right spot can make or break your franchise. Research and choose wisely. Be sure to ask the franchisor if they offer real estate assistance.
  • 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.
  • Prepare for hard work: Success requires commitment. Be prepared to put in the hours and adhere to the system.

Franchise with Wayback Burgers

As a potential franchisee, you’re on the cusp of a significant journey. A business format type of franchise model could be your ticket to entrepreneurial success, provided you go in with your eyes wide open, recognizing both the potential rewards and the risks. One franchise brand that exudes potential and ticks all the boxes is a Wayback Burgers franchise.

Guests love us for our made-to-order burgers, fries, hand-dipped milkshakes, and friendly service delivered at all our locations. Franchisees love the focus on excellence and the opportunity to partner with one of the top better burger brands that’s invested in their success.

To learn more about franchising with Wayback Burgers, get started today.