Still thinking RIGHT FRANCHISE Business model ?

 If you are planning to opt for franchisee model and still stuck on - which model will work best for you/your business !






( Sharing details of all 4 models with the Pros (+ Points) & Cons (- Points) along with examples for each.

Franchising is a widely used business expansion strategy, and companies adopt different franchise models based on their goals and market approach. The four main franchise models are COCO (Company-Owned, Company-Operated), COFO (Company-Owned, Franchise-Operated), FOCO (Franchise-Owned, Company-Operated), and FOFO (Franchise-Owned, Franchise-Operated). Each model has its unique structure, benefits, and challenges.


Let’s explore these models in detail with their working structure, advantages, disadvantages, and real-world example



1. COCO (Company-Owned, Company-Operated)

Working Structure

In this model, the company fully owns and operates the business outlets.

The company manages everything, from investment to daily operations, marketing, and staffing.


It ensures direct control over business quality, customer service, and brand reputation.


Pros (+ Points)


+ Full control over operations and quality

+ Consistent customer experience across all outlets

+ Direct profit without sharing revenue with franchisees

+ Strong brand positioning and reputation management


Cons (- Points)


- Requires high capital investment

- Expansion is slow compared to franchising models

- High operational and management costs


Examples

1. McDonald's (Initially followed COCO in various locations before franchising)

2. Starbucks (In India, Starbucks operates under COCO through its joint venture with Tata)

........ .......... ........... .........

2. COFO (Company-Owned, Franchise-Operated)

Working Structure

The company owns the outlet but gives the operational rights to a franchisee.


The franchisee manages day-to-day operations while paying a fixed fee or revenue share to the company.


The company provides branding, products, and strategic guidance, while the franchisee ensures smooth execution.


Pros (+ Points)

+ Lower risk for the company as it doesn’t handle daily operations

+ Faster expansion compared to COCO

+ Ensures standardized operations with company oversight


Cons (- Points)


- Quality control can be challenging if franchisees don’t follow company standards

- Revenue sharing may limit company profits compared to COCO

- Franchisee performance impacts the brand image


Examples

1. Domino’s India (Operated by Jubilant FoodWorks under a COFO model)

2. KFC India (Company owns outlets but allows

franchisees to operate them)

......... ........... .......... .......

3. FOCO (Franchise-Owned, Company-Operated)


Working Structure


The franchisee (investor) owns the outlet but does not operate it.


The company takes responsibility for running operations, hiring staff, and managing sales.


The franchisee earns a fixed return or revenue share while the company ensures smooth execution.


Pros (+ Points)

+ Ideal for investors who want returns without operational involvement

+ The company maintains operational control, ensuring brand consistency

+ Faster expansion with lower financial risk for the company


Cons (- Points)

- The company bears operational responsibility, which can be costly

- Franchisees may feel disconnected from daily operations

- Profits are shared, making it less lucrative for the company than COCO


Examples

1. Reliance Trends (Many stores follow the FOCO model with investors owning stores, but Reliance manages operations)

2. Jio Stores (Reliance owns operations while individual franchisees invest in the store setup)

.......... ............ ............

4. FOFO (Franchise-Owned, Franchise-Operated)


Working Structure


The franchisee owns the outlet and is fully responsible for operations.


The company provides branding, training, and product supply but does not manage daily activities.


Franchisees pay the company either a fixed fee, a percentage of revenue, or product purchase charges.



Pros (+ Points)

+ Fastest expansion model with minimal investment by the company

+ Less financial risk for the brand

+ Encourages entrepreneurial spirit in franchisees


Cons (- Points)

- High dependency on franchisees for maintaining brand standards

- Inconsistent customer experience if franchisees do not follow guidelines

- Limited company control over pricing and service quality


Examples

1. Subway (Most outlets globally operate under the FOFO model).

2. Apollo Pharmacy Franchise (Franchisees invest and run the business under the Apollo brand)

......... .............. .......

Each business model has its advantages and challenges, and companies choose them based on their strategy, financial capability, and expansion goals.


# COCO is ideal for premium brands that want full control but require high investment.


# COFO allows faster expansion with controlled operations.


# FOCO is great for investors who want a steady return without daily involvement.


# FOFO is the best for rapid expansion but requires strong franchisee management.


For more details you can click on the link below, we at CBC would share/implement the suitable strategy as per your business model (will also assist in drafting leagal documents etc.)

cbc.amanchopra@gmail.com

For any query please feel free to contact at given mail id

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