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Business Format Franchising: What's that? Which markets are currently dominating in growth?

The concept of Business Format Franchising repeatedly occupies a prominent position in seminars and lectures in business administration. For startup founders and budding franchisees, it is one of the basic vocabulary terms of the franchise theme; The success of numerous international franchise companies is based on the concept of Business Format Franchising. In short, this term describes the most widely used model of franchising, for franchisees it is often the most attractive and simplest form of a franchise partnership. Learn more about business format franchising with Engel & Völkers, and find out why certain branches can enjoy a particular success potential with it.

The emergence of business format franchising

Since its creation in the mid-twentieth century, franchising has become more and more popular, especially in the US and Europe, but also on other continents. Over time, various sub-types of franchising emerged, from which the business format franchising concept began to emerge as the most efficient one. Sales figures and companies that used the business format franchising increased steadily during the 1990s until it became the most successful franchise concept at the latest by the turn of the millennium. The world's best-known franchisees owe their success to business format franchising, while the end of the franchising era is far from over.

Hamburg - Engel Voelkers operates internationally with numerous real estate shops within the real estate franchise

This is how Business Format Franchising works for franchisors and franchisees

For a franchisor, the concept of business format franchising is an opportunity to expand its own distribution network, combining low financial outlay and outsourced risk with good controllability and longevity. Through licensing agreements with independent entrepreneurs, it does not only authorize franchisees to distribute the products they manufacture and to use their brand presence, but also provides them with a comprehensive set of operational strategies, quality management services and training. The public presence of all franchisees and the franchisor show a high degree of homogeneity, since all licensing partners use the same marketing and CI material. The requirements of the franchisor are usually particularly detailed and binding, as deviations contradict the principle of a uniform, concise appearance. This way, Business Format Franchising also differs from other franchising subtypes, such as product distribution franchising or manufacturing franchising, where only the right to manufacture or distribute the franchisor's goods is licensed.

The franchisee benefits on the one hand from the franchisor's already fully developed and proven business concept, which enables him to launch his business quickly and successfully, and on the other, he bears the economic responsibility for his business, thereby reducing the risk of expansion. and cost to the franchisor. The selection of the right location, the formation of the team of employees and the administration of the company are in accordance with a traditional foundation of the franchisee, so that despite a franchise retention, a degree of entrepreneurial freedom is maintained.

Business Format Franchising - Future success a matter of the industry?

Business sectors that are currently experiencing particularly high growth potential through the business format franchising are focused towards the society within which they are intertwined. For example, aging populations around the world and more and more working women are ensuring that the areas of service, household, and care will in future also be tapped into by franchising. High rates of graduation coupled with a decline in skilled traineeships can lead to increased demand for repair and maintenance services - major changes and new franchisors are also expected in this area. But there are also untapped potentials in business fields that are still largely unknown or in development. Transportation is experiencing a fundamental reformation through autonomous driving and electromobility, while cryptocurrencies could fundamentally change the financial sector. All these are sectors in which immense market dynamics can be expected in the coming years. An ingenious franchise concept and the right idea at the right time can be the initial spark that will be the next big franchise company that will reach an international level.

Engel & Völkers is represented at over 800 locations worldwide with its pioneering real estate franchise concept. First-class services in the area of marketing, consulting and mediation have made our brand one of the most successful international industry players. Would you also like to become part of the Engel & Völkers success story? Click this link to get more information.



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