Starting a business through the franchise model now a day has become really simple because a team of experts like PROPERTYYY.com has put together all brands in one place. Where you can go and choose a brand that suits your persona and meets your requirement. But thorough research is important before you approach a consultant.
So today, we have compiled a list of franchise business models of Brands that you must be aware of. It would help you understand what’s business model run brand you can opt for.
What is COCO Model (Company Owned Company Operated) – COCO stands for Company Owned and Company Operated, where the brand owns the franchise store unit and operates the business itself. It basically does not have to do anything with franchising. So, the company invests its own money in the franchise. And the franchise is managed by employees of the brand.
COCO Brand Example – Lenskart, Reliance Jio Mart, Bigbazar, 24 Seven, etc.
What is FOCO Model (Franchise Owned Company Operated) – The initial setup cost is born by the investor (franchise) in the FOCO model. And operations are managed by the Brand. The running cost (operations) is borne by the Brand. So, the franchisee gets a minimum guarantee or percentage of revenue earned in return . Here, the franchise investor is the owner of the business, and the company will be responsible for operating it and taking care of all the things necessary to run an outlet. The company will also have to give a fixed percentage of profit shares to the owner of the franchise.
FOCO Brand Example – Bistro 57
What is FICO Model (Franchise Invested Company Operated) – This model is similar to the FOCO model. But in the FICO model, Brands raise money from Investors with the commitment of opening franchises. Basically, the investor (franchise) only invests in the business. So, the franchise investor does not involve themselves in business operations at all. The Company runs the business operations with end-to-end control of the supply chain. It’s more like an angel investment.
FICO Brand Example – Cult Fit Gym Franchise
What is COFO Model (Company Owned Franchise Operated) – This is where the company invests in the franchise business and franchise operates it as per the directions set by the brand. The returns for this can lie somewhere between the FOCO and FOFO models. This is rare and not very common in the industry because most companies investing in the expansion of their business operations would prefer to run it on their own.
COFO Brand Example – ?? Doesn’t exists ?? 🙂
What is FOFO Model (Franchise Owned Franchise Operated) – In this model, the company gives its brand name to the franchise investor. And they give it for a particular non-refundable sum (franchise fee) and for a pre-agreed time period. The Prices and merchandise for the outlet are decided by the brands. So, the franchise investor is the owner of the store, and all the operational cost has to be borne by the franchise itself. Moreover, the Franchise has to pay some percentage share of revenue (royalty) to the Brand as well.
FOFO Brand Examples – More than 80% of the brands prefers this model. CLICK ME to see Brand List.
99% of brands start operations with the COCO franchise model. Then, the Brand gets into a franchise model to expand its footprints in other parts of the region after getting well-established. So, the most common models opted by brands for expansion are FOFO and FOCO models.
FOFO franchise model requires high investment from the investor as all Operations, Marketing, Advertising, Logistics, Electricity, Staff wages, rent, etc. are looked after by the investor only. Moreover, it is less preferred by the brand because generally after some years, the franchisees take hold of things and don’t adhere to company policies. Which causes a decline in the brand value.
As a result, the brand and the investor are usually seen to prefer the FOCO franchise model as it poses minimal risks to both parties.
So, in the end, I hope that you find franchise business models helpful. Please comment below for any clarification or suggestion.
CEO & Founder – PROPERTYYY.com
Vishesh Rai Buffett is an Indian entrepreneur and technology evangelist by heart. He is the Founder and chief executive officer of PROPERTYYY.com, the only Real Estate Consultancy Chain in India.