All You Need To Know About FOCO Model in Franchising

Fortune Franchise April 28, 2021

The franchise is a form of business organization in that franchisor, has a well-established successful product or business model, enters into a continuing contractual relationship with other business called franchisees. Before investing money in a franchise business, budding entrepreneurs should know about the franchise business models, which one will reap more benefits?

Here in this article, let’s discuss the most preferable franchise model in India “FOCO” means Franchise Owned, Company Operated.

What Is FOCO Model?

In simple terms, the investor just has to invest the money and the rest will be handled by the company. Including handling daily operations, set up interiors, providing manpower, packaging, and raw materials, etc. will be done by the company. In turn, the franchisee gets a minimum guarantee or percentage of revenue earned. Plus, the Investor will also get the fixed percent profit margin on the business.

So, the best model for franchising is undoubtedly the FOCO model, where both investors and franchisor are safe in some perspective, also having control over the business operations.

Benefits of FOCO Model

• FOCO is one of the most popular models in the franchise market and it has plenty of advantages for both franchisee and franchisor:
• In a general point of view, the franchisee gets a minimum guarantee of revenue shared.
• Risks-free for investors as a franchisor (company) takes care of entire store operations.
• The profitable and also feasible business model favors the investor (franchisee) in many ways.
• The franchise will be monitored by the company in order to meet the standards.
• Customer service is better and handled by the company.
• Franchisee does not pay for operational cost, and the franchisor/company does not pay for capital expenditure (set up cost)
• In this FOCO model have reduced the chance of unethical practices and unprincipled act.
• A franchisee can be focused on sales & increasing profitability, leaving the operations & logistics to the company.
• Franchisor / Company will take care of all the necessary things to run an outlet including Marketing, Advertising, Logistics, Electricity, Staff wages, etc.

Why FOCO is the better business model?

Every business model has its own benefits and cons, But the FOCO model is turn out to be a win-win situation for both investors and the company. Apart from that, a well-established company brand operating an entire franchise outlet intends, customers have more trust & faith in their services. All the functions are being observed by the company and therefore there is very little chance for violations and thus customers can be sure about the quality.

According to financial experts “They strongly recommended that FOCO model can be best & suitable for budding entrepreneurs”. In terms of return on investment (ROI) in the FOCO model, the company has the liability to give ROI on time even it’s either profit or loss.

Hence, the FOCO Franchise model offers better value for both company and franchisee and one step advanced than other franchise models.

At Fortune Franchise, our franchise consultant experts will guide your correct way to choose the best-fit franchise business. Contact us now!