Franchise Business Models – COCO, FOCO, COFO, FICO, FOFO
If you are looking for Franchise Business Models, it clearly means that you are planning to buy a franchise or wants to start your own franchise chain.
So today, we have compiled a list of franchise business models of Brands that you must be aware of. It would help you understand what’s business model run brand you can opt for.
Franchise Business Models
There are five Franchise model business
COCO (Company Owned Company Operated)
FOCO (Franchise Owned Company Operated)
FICO (Franchise Invested Company Operated)
COFO (Company Owned Franchise Operated)
FOFO (Franchise Owned Franchise Operated)
1. COCO Model
What is COCO Model (Company Owned Company Operated) – COCO stands for Company Owned and Company Operated, where the brand owns the franchise store unit and operates the business itself. It basically does not have to do anything with franchising. So, the company invests its own money in the franchise. And the franchise is managed by employees of the brand.
2. FOCO Model
What is FOCO Model (Franchise Owned Company Operated) – The initial setup cost is born by the investor (franchise) in the FOCO model. And operations are managed by the Brand. The running cost (operations) is borne by the Brand. So, the franchisee gets a minimum guarantee or percentage of revenue earned in return . Here, the franchise investor is the owner of the business, and the company will be responsible for operating it and taking care of all the things necessary to run an outlet. The company will also have to give a fixed percentage of profit shares to the owner of the franchise.
3. FICO Model
What is FICO Model (Franchise Invested Company Operated) – This model is similar to the FOCO model. But in the FICO model, Brands raise money from Investors with the commitment of opening franchises. Basically, the investor (franchise) only invests in the business. So, the franchise investor does not involve themselves in business operations at all. The Company runs the business operations with end-to-end control of the supply chain. It’s more like an angel investment.
4. COFO Model
What is COFO Model (Company Owned Franchise Operated) – This is where the company invests in the franchise business and franchise operates it as per the directions set by the brand. The returns for this can lie somewhere between the FOCO and FOFO models. This is rare and not very common in the industry because most companies investing in the expansion of their business operations would prefer to run it on their own.
5. FOFO Model
What is FOFO Model (Franchise Owned Franchise Operated) – In this model, the company gives its brand name to the franchise investor. And they give it for a particular non-refundable sum (franchise fee) and for a pre-agreed time period. The Prices and merchandise for the outlet are decided by the brands. So, the franchise investor is the owner of the store, and all the operational cost has to be borne by the franchise itself. Moreover, the Franchise has to pay some percentage share of revenue (royalty) to the Brand as well.