Franchise Types & Structures Explained

Contrary to popular belief, franchising as a business model has been around for quite some time. While a large portion of the world believes McDonald’s are the pioneers of franchising, they really aren’t.

At its most essential form, franchising is the granting of rights from one establishment to another for a given area. Lords used to grant rights to individuals to maintain order in markets and perform business activities there.

Jump a couple hundred years into the future and Ray Croc joined McDonald’s and built the business into the global franchise it is today.

Yet, franchising as a business model has grown, changed and adapted quite a lot in the last few decades. More complex and improved franchise structures have appeared, and many businesses, like we at Fantastic Services, believe that franchising should be a mutually beneficial relationship.

Now, what are the most common franchise structures and what rights those franchisees have?

Franchise models are specifically designed to allow local businesses to grow into global conglomerates. Inherently, they come with complex structures that are hard to understand by people who aren’t familiar with franchising. A basic franchise structure consists of three franchise levels:

Sub-franchisor

Sub-franchisors have the ability to sell franchise rights to third parties in a designated territory.

Simply put, they are the franchise right holder for a city, county, or a whole country! Outside of the United States, sub-franchisors are often called “Master Franchises”.

While many companies operate using the above-explained franchise structures, they’re often not enough to support modern, agile businesses.

When we went into franchising, Fantastic was a rapidly growing, fast-changing company that could not survive with an old school franchise structure like that.

That’s why we went on to create our own franchise structure that would benefit our franchisees, customers and future goals.

You can’t put a technology-backed franchise into a business structure originating from the Middle Ages and pioneered in the 1950s. It just doesn’t work.

We set out to create three franchise types, that would create a franchise structure suitable for our business needs.

Master Franchise

Our Master Franchise (or if you’re from the US — sub-franchisor) franchisees hold the rights to sub-franchise our brand, know-how and technology in their country.

They’re responsible for everything — from building the Fantastic brand in their country to creating a back-end support centre to meet the demands of the franchisees below them in the structure.

To explain it simply, we (the franchisor) hold the franchise rights for the United Kingdom. We’re responsible to provide sales, marketing and technology support to our franchisees throughout the UK.

Area Developer

Likewise, our area developers are the franchisees that own the franchise rights for a given area within a country (let’s say a city or a county). They have the responsibility to develop the market in their area.

Let’s break down our Area Development franchise by taking a look at Ivanka Obreshkova’s Oxford area. Since she started working with us she grew from just a single-team to 30+ teams under her management.

Ivanka is responsible for the seamless delivery of service in Oxford and a few other areas. She takes care of the expansion of her business, while we collaborate on marketing campaigns and help her with sales and technology development. That way Ivanka just has to focus on what’s important to her — growing her business.

Working Franchise

Our smallest franchise unit is our working franchise. We had to create something that could accommodate the large number of people who aren’t interested in managing 30+ teams. A lot of people in our niché just want to work for themselves, often by themselves.

Our working franchisees are responsible for providing services on-location. They are the gardeners who love the smell of freshly mowed grass in the morning, and the cleaners who aren’t satisfied until every dirty spot on the carpet is removed.

Likewise, working franchisees don’t have to worry about marketing or sales or business development. Just like area developers, they benefit from Fantastic Services’ know-how and experience.

In our quest to create a franchise structure to accommodate the full spectrum of businesses, we believe we made something that’s not solely focused on growth.

Rather than chasing vanity metrics, we aim to support small, local businesses and communities first. We want more local ventures to provide jobs and train people. And we want to set an example of how a business shouldn’t be run on numbers and spreadsheets and growth-hacking, but rather support, encouragement and empathy.

While we are nowhere near the size of McDonald’s or Anytime Fitness, we believe and know our franchise structure builds wealth in every area we operate.

• Last update: May 27, 2021

Posted in Advice Hub, Fantastic Family