Franchise Spotlight: Distribution
A distribution franchise operates differently from other franchise models- discover if it’s for you.
Distribution or product-driven franchises are franchises based on relationships between supplier and dealers. As a franchisee in a distribution franchise agreement, you will be responsible for distributing the franchisor’s product.
This type of franchise is often reserved for larger products like cars and car parts, appliances, computers, or vending machines. Some franchisors will licence the manufacturing process as well as the distribution of the product. In most cases, the franchisor will be responsible for giving the product to the franchisee for distribution.
Distribution Franchise Industry
This type of franchise structure will give the franchisee a lot more independence than many others. However, you will still need to follow the guidelines set out by the contract between you and the franchisor.
A franchisee will have to pay fees to use the trademark and distribute the product. While there are fewer distribution franchises in general, because of the value of the items that are distributed through this model, it represents a larger percentage of total retail sales.
You will be bound by a legal contract with the franchisor and this contract will outline the costs and responsibilities of the parties involved. In most cases, the distributor will operate under their own business name. You will operate as a reseller of the products of the franchisor or the company that makes the product or owns the trademark.