What Are the Different Types of Retail Franchises?

By Franchise Gator

Posted : June 20, 2023

Category : For Beginners

What Are the Different Types of Retail Franchises?

Are you interested in starting a franchise that sells goods and services you actually believe in? Retail franchises open a world of possibilities for business owners—and they draw in customers too! You might be wondering about what a retail franchise really is, what types of franchises you’ll find in retail, or even the difference between a franchise and corporate retail store. In this blog, we’ll explore all of these ideas—and even give you an example!

What Is a Retail Franchise?

Retail franchises are businesses that you can license from a franchisor, while selling their products or services. Franchisees are able to sell these goods and services by paying a fee—typically as startup fees and continuous royalties—to the parent company. Retail franchises range from store sales like Red Wing Shoes, to hair cuts or even dog training. Because of the vast amount of options, you have the freedom to choose a franchise that resonates with your own unique passions. Whether that’s printing and marketing services or a gym, you’ll always be able to find a retail franchise that suits you.

What Are the 2 Basic Types of Franchising in Retail?

types of retail franchises

The most popular type of franchise when it comes to retail stores is a business format franchise. The franchisor of a business format franchise typically gives the newly invested business owner a complete set of resources for opening and running their own franchise. These resources include but are not limited to:

  • Equipment
  • Training
  • Operations
  • Contracts with suppliers
  • Marketing materials
  • General support

In most cases, the franchisor provides plenty of support to the franchisees as they get their businesses off the ground. Under this framework, franchisees operate in accordance with the standards set by the parent corporation. For example, franchisees operating under a business format are expected to offer the franchisor’s products and/or services and are restricted from selling any items not specifically authorized by the franchisor. 

Product distribution franchises are less prevalent than the standard business format. Franchisees—also known as dealers or distributors—in product distribution franchises can sell the franchisor’s items using their own business’s name. In other circumstances, like with soft drink producers, the franchisor will grant the franchisee control over not only distribution but also some aspect of production. But you don’t get the business format structure and guidance you find with other types of franchises. Automobiles and auto parts, vending machines, major home appliances, and other comparable products are the most common merchandise for product franchises. 

What Are the Advantages of Franchising a Retail Store?

One of the leading advantages of investing in a retail franchise is the ability to offer consumer products and merchandise under a recognized trademark or brand name. In fact, franchises account for 11.4% of all businesses and the industry continues to grow year-over-year. Additionally, a report indicated that 92% of franchises survived two years and 86% lasted at least five years. In contrast, 25% of independent businesses fail within a year and 50% will be unsuccessful within five years. 

These statistics show that consumers continue to shop brands that they recognize, which greatly impacts the success of franchises over independent businesses. Brand loyalty is especially important when comparing the time and resources needed to start your own small business. Researching, designing, and testing has already been done with a franchise model, meaning you can invest in a business that has been proven to work. 

Starting from the ground up is not only difficult, but it’s hard to tell how well your business will do without brand recognition. With Franchise Gator, you can invest in a retail franchise with confidence and watch your sales increase with a widely recognized product or service. 

What Is the Difference Between a Retail Chain and a Retail Franchise?

To put it simply, chain stores are run and operated by a corporate entity, whereas retail franchises are typically run by the individual owner. Let’s break it down further:

A chain refers to a group of stores owned by the same company—with the same brand name—that operate under identical corporate policies and offer the same products. Because of this, chain stores form a large network of retail locations, which leads to efficient operations—within and between stores. Franchises, on the other hand, generally have many locations, each of which is owned by an independent entity or person. To put it another way, a franchisee pays a fee to the franchisor in exchange for the right to operate a business, while a chain store is owned and operated by a large corporation.

Another important difference is that, unlike the chain stores who assume all of the company’s risk, the franchisor, under an individual franchise agreement, passes some of the risk to the franchisee. This risk comes in the forms of financial loss or overall success of operations, which relies solely on the franchisee. That’s one reason why franchising includes starting your own corporation or limited liability company (LLC)—to remove financial liability from the owner’s personal assets.

This might sound scary, but don’t let the potential of risk stop you from investing in a franchise. All business owners take on some type of risk, but with a franchise you’re more likely to succeed due to the proven business model you’re provided. If you’re interested in researching retail franchise business opportunities, you can search the Franchise Gator directory for businesses within your price range and location. 

What Is an Example of a Retail Franchise?

Minuteman Press is one of the most popular business-to-business (B2B) printing services available. For more than 45 years, they have provided businesses with digital print, design, and promotional products and services while maintaining a strong focus on customer service. With Minuteman Press, you can offer products ranging from posters, letterhead, and direct mail to services like logo design, infographics, and website design. In order to help you grow your franchise businesses, Minuteman Press has embraced the digital age and made full use of the new technologies and resources at your fingertips. As a result, local businesses can work with any Minuteman Press franchise to fulfill their design, print, and marketing requirements. 

You can find Minuteman Press and other successful retail franchises on Franchise Gator. Whether you’re searching by industry, investment level, or location, you’ll find the best franchise for you in our expansive directory. We’ve been helping franchisees connect with franchisors since 2002, and aim to be your one-stop-shop for business ownership information and research. Visit our website for more information on getting started with your own retail franchise business!

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