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Frequently Asked Questions - FAQ

What are the different types of franchise?

There are various types of franchise. Generally speaking, a distinction can be made between industrial franchising and commercial franchising:

• Industrial franchising: form of business collaboration between manufacturers. The franchisor owns a manufacturing system and/or exclusive patents, which are assigned to another manufacturer for use in a predetermined territory. Given that the franchisee could easily undermine the franchisor by copying formulae and methodology received, the franchisor does not generally transfer the entire production process to the franchisee, only a part thereof.
• Commercial franchising: this type of franchising can be divided into:
   o Goods franchising or distribution franchising: franchise system whose objective is to market a product or a number of products, usually manufactured, distributed or selected by the franchisor, on an exclusive basis, or otherwise. (e.g. clothing)
   o Service franchise: business aiming to provide a service or group of services, commercialised by the franchisee, in accordance with methodology provided by the franchisor. This type of franchise requires a greater level of control by the franchisor in order to guarantee that the service provided is adequate. (e.g.  hotels)
  o Mixed franchise: franchises which integrate both goods and services. (e.g.  certain restaurants)

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