Small Business Franchise

Small business franchise vs. product distribution franchise

Two different types of franchise exist; the small business franchise and the product distribution franchise. People are more familiar with the small business franchise because they constantly surround us; these are the Pizza Huts, the 7-Elevens and the Merry Maids of the world. The product distribution franchise is just as common, yet not quite as noticeable because they tend to work 'behind the scenes.'

The small business franchise, formally known as the business format franchise, is a complete package that is 'rented' from a parent company, while the product distribution franchise deals with exactly that - the product and it's end result.

The business format franchise lets the franchisee use the company's trademark, logo, copyright, marketing, service and operating systems. The small business franchise comes with its own regimented method for running an already-established business. Small business franchises are most common among the food, automobile, lodging, lawn care, cleaning, convenience store and professional service industries.

Meanwhile, the product distribution franchise merely sends on its product to be sold. They do not have any part or interest in actually operating the franchise. The franchisee is allowed to be much more independent than if he or she was running a small business franchise.

Some well known product distribution franchises are Coca-Cola, the Ford Motor Company and John Deere. Product distribution franchises differ quite a bit from their business format brethren, but they bring in the largest percentage of total retail sales in the industry.

Product distribution franchises deal mainly with large products such as automobiles and auto repair parts, vending machines, computers and some inventory for convenience stores.

Product distribution franchises are similar to 'supplier-dealer relationships', but while suppliers and dealers tend to be completely 'hands off' when dealing with one another's operations, the franchisee is required to observe a few guidelines. These can be as simple as agreeing to sell only the franchise company's exclusive brand. For example an independent garage will use and promote only Maaco products, while a school may agree to sell only Coca-Cola products in its cafeteria and at all sporting events, at the exclusion of Pepsi.