Types of Models under the franchise
There are 4 types of franchise models:
- Company Owned Company Operated (COCO)
- Company Owned Franchise Operated (COFO)
- Franchise Owned Company Operated (FOCO)
- Franchise Owned Franchise Operated (FOFO)
The type of franchise model that a brand offers is dependent on the nature of the business. Of course, there are associated advantages and disadvantages of each one
Company Owned Company Operated (COCO) – COCO is a model where the franchise store unit is owned by the brand and is run by the brand. It has nothing to do with franchising in the least. As a result, the franchise is funded entirely by the company. Employees of the brand run the franchise.
Company Owned Franchise Operated (COFO) – This is where the company invests in the franchise business and the franchisee runs it according to the company’s guidelines. This is unusual and uncommon in the market because most businesses that invest in expanding their operations choose to do so by themselves.
Franchise Owned Company Operated (FOCO) – The franchisee is the one that owns the property and is responsible for all additional capital expenditures. The store/outlet operations are managed by the franchising company. It is also known as Franchise Invested Company Operated (FICO)
Franchise Owned Franchise Operated (FOFO) – The company gives the franchise investor its brand name in this FOFO model. They do so in exchange for a non-refundable (franchise fee) and a pre-determined period. The brands decide on the prices and items for the outlet.
As a result, the franchise investor is the store’s owner, and the franchise must bear all operational costs.
Also, the Franchise is required to pay the Brand a percentage of income (royalty).
This model is the most used in the marketplace.
Under this model most of the risk & rewards rests with the franchise and support such as technical know-how, menu, SOPs, raw materials, operational guidelines, etc. are provided by the franchisor company.