September 20, 2021

Franchising is a great way to explore when starting a business. Before investing money in a franchise, budding entrepreneurs look for the best business models that work best for them. The question that arises in the eyes of all is which franchise model will bring the most benefits. How are the models different? What are the advantages and disadvantages? If you are one of them, don`t get angry, we`ve got you covered. Each franchise model is of different types. People who are not aware of it miss the opportunity for the most appropriate frankness. Many people don`t know that not all franchise models are the same. So let`s try to figure out any franchise model on this blog. While aspiring entrepreneurs, who have a large sum in their account to invest in it, opt for the FOFO model. While the FOFO expansion model is not favored by many brands. This is because after about a year, franchisees tend to take action and not follow company guidelines, resulting in a decline in brand value. As a result, the return of investment (ROI), usually insured over three years, extends to five. Subsequently, the company either receives fines or withdraws from the contract and eventually closes its franchise operations.

The parties decide, on the basis of various commercial considerations, on a model for the operation and operation of a franchise. It is very important that the conditions for revenue sharing, territorial exclusivity, role and responsibility of each party are clearly defined in the agreement. In this article, we will focus on some of the key elements of the franchise agreement. Company Owned Franchise Operated, in short, known as COFO. In this model, a franchised business makes investments, site choices, real estate deposits, and other expenses. At the same time, the franchisee takes care of additional operating costs such as salary, electricity and various expenses. A payment that can go both ways is rent. In some cases, it is the franchisee who bears the rent and, in some cases, it is the franchisee who takes care of it. Some expenses are borne by both parties. It depends on the conditions set by the franchisee.

In the initial phase, while the company has just started operations, the company usually operates on the COCO model until it has established itself in the market. The main advantage of including this clause in the agreement is to guarantee a fixed income to the franchisee. The main purpose of this clause is to ensure that the franchisee ensures that the franchisee obtains a minimum return during the term of the franchise agreement. In the FOCO model, the initial installation costs arise from the franchise. The operating costs are borne by the company and, in return, the franchisee benefits from a minimum guarantee or a percentage of the turnover achieved. The franchise is the owner of the business and the company is responsible for operating it and taking care of all the things necessary to operate a point of sale, such as marketing, advertising, logistics, electricity, employee salaries, rent, etc. The company must also give the franchise owner a fixed percentage of the profit shares. The franchisee having made most of the investment, he obtains most of the turnover. While a franchisee receives a small share in the form of royalties. Franchise Owned Company Operated, in short, known as FOCO. At FOCO, it is the franchisee who owns the property and takes care of the other investments. While the franchising company manages the Store/Outlet business.

This model is also called Franchise Invested Company Operated. The outlets of the company we meet are examples of COCO. These points of sale are interprofessional. From the automobile to the computer, from jewelry to fashion. In a large number of sectors, we find many examples of models owned and owned by the company. In this model, the company typically leases the operation of the business to a franchisee to take over and ensure that the standards set by the company are met.. . .

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