So you’ve done a bit of research and you realize that there are many different types of franchise opportunities out there to invest in. Some are attractive, some not so attractive. So if you’re contemplating making an investment by affiliating yourself with a franchise, you need to do your homework and research each type of opportunity to protect against an unsuccessful business. You want to invest in a franchise that will do well, and while learning about each type isn’t a sure-fire guarantee that you’ll make millions in your first year, it certainly won’t do any harm.

There are two main categories when referring to franchise opportunities. These are product and trade name franchising and business format franchising.

Product and trade name franchises are the big blue chip industries such as soft drinks or beverages, automobiles and gas companies. In this situation, the large organizations supply the merchandise, logo and trademarks. In addition, they are responsible for the advertising. The franchisee do not pay royalties on the sales and is there to sell the products or service supplied by the franchiser. In order to have everything needed to run a successful franchise, the franchiser helps with the set up, scouts out a lucrative location and supplies anything else required to run the business.

The second method is business format franchising. An essential part of the business format franchising is the use of trademarks and logos. The franchiser will help with the site selection and the franchise company will determine the design and layout of the business.

It is interesting to note that studies have shown that the color on the walls in an eating area of a fast food restaurant will determine how quickly people will finish their meal. Hence, the quicker people eat the more people they can accommodate in a day. Therefore, franchisers are determined to stipulate to the franchisee something as basic as wall color. The franchiser also has a say in the advertising, training and the service/sales philosophy of the employees.

Convenience stores, automobile services, hair salons and so many others in this industry are just a few examples.

The franchisee will pay a fee up-front at start-up and continuing royalties in return for continued assistance of the franchiser.

Acquiring a franchise based solely on the brand name will not guarantee your business instant success. You really need to consider which type of franchise suits your personality and interests. Be aware and choose wisely.