What are the differences between different types of franchises?

In California, franchises are categorized into two main types: business-format franchises and product franchises. Business-format franchises are the more common type. This type of franchise allows the franchisor to maintain control over the business by providing the franchisee with a business system, trademark, and ongoing support. The franchisee pays a fee to the franchisor in exchange for these services. Product franchises on the other hand, don’t provide the same level of control to the franchisor as business-format franchises do. Instead, the franchisor sells a product line to the franchisee who must then sell it on to the consumer. The franchisor does not have any control over the operations or marketing of the business. Another major difference between the two types of franchises is the fees. Business-format franchises typically charge much higher fees for the use of the business system, trademarks, and ongoing support. Product franchises may charge an initial franchise fee as well as ongoing payments for the product line, but these costs are usually much lower than those of business-format franchises. Ultimately, the differences between business-format and product franchises lies in the level of control the franchisor has over the business, as well as the fees associated with each type. Franchisees should carefully consider these differences when deciding which type of franchise is right for them.

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What are the differences between different types of franchises?

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