FOCO and FOFO Model:-

1. FOCO Model: Franchisee-Owned, Company-Operated

What is FOCO Model?
The FOCO model entails a partnership where the franchisee owns the business, but the company takes charge of its operations. In the context of Cloud Kitchens and food franchises, this means the company manages the day-to-day running of the kitchen while the franchisee reaps the benefits of ownership.

FOPO Model:

The FOPO Model, which stands for Franchise-Owned, Franchise-Operated, gives business owners greater authority over how their businesses are run. To increase revenue, franchisees can work with kitchen partners and manage several sub-brands. Franchisees oversee daily operations, such as staffing, rent, and kitchen setup, even though they still own the outlets. They also get assistance and direction from the franchisor, guaranteeing a successful effort in the hard food industry.  

Advantages of the FOCO Model 

The FOCO franchise model offers numerous advantages for aspiring businessmen looking to enter the food franchise industry:

Low-Cost Investment: Not needing a physical store, the startup cost of an order-selling virtual restaurant is considerably lower than that of a traditional one making it a low-cost franchise.

Minimal Overhead Costs: As the costs are nearly reduced with the absence of rental space or general expenses concerning utilities and maintenance, the profit margins are the maximum of the FOCO model food franchise in India.

 Operational Support: Unlike self-enterprising owners the franchisees have access to superior knowledge and experience, which lets them successfully run the business doing fewer risks.

Benefits Of the FOCO Model Cloud Kitchen Franchise

No Need for Staff:

• The foco model franchise’s workers are almost not needed anymore, since administrative and managerial costs are taken away from the franchisee.
• The company undertakes all overhead costs such as salary, rent, and other costs.
• This provides the franchise rather profit margins, cuts out the other expenses, and relieves the franchisee himself from any hassle and stress.

Low-Cost Investment:

• Compared to indoor businesses, the FOCO model franchise is a low-cost investment perspective.
• A decline in the need to run physical stores, absent staff requirements, and lower overhead costs allows food franchise businesses to have lower financial risks.
• Thus, being relatively cost-effective, it provides for the needs of businessmen who are willing to start their; business with a minimal initial investment.

High Margins:

• • The foco business owners benefit by operating the franchise more efficiently and less expensively and depend less on an extensive company.
  • Hiring a company to handle operations tasks allows franchisees to put their efforts where they count the most, which is towards branding and customer service.
  • This means a higher profitability that ensures sustainability and ROI for the business.

FOCO and FOFO Model: Choosing the Right Model for You

Cloud Kitchens and Food Franchises in India:

1. Operational Involvement:
   • FOCO: Limited operational involvement for the franchisee.
   • FOFO: Hands-on management of day-to-day operations by the franchisee.
2. Expertise and Support:
   • FOCO: Leverages the company’s expertise in operations.
   • FOFO: Requires the franchisee to develop operational know-how.
3. Brand Consistency:
   • FOCO: Ensures consistent brand standards under company management.
   • FOFO: Allows for flexibility, potentially adapting to local preferences.

5 Biggest Differences Between FOCO and FOFO Model

 

1.) Ownership

In the FOCO and FOFO Model, the franchisee owns the business while the company operates it. This means that the franchise investor gives a one-time lump sum payment based on which they establish the business. The franchiser handles all the legalities and paperwork based on the money given by the franchisee. This lends a professional business approach to the franchise and also takes the day to day business running out of the franchisee’s hands. In contrast, the FOFO model requires the franchisee to handle all daily processes. So, the investor has to handle the everyday management tasks including the establishment purchase/rent and upkeep, employee retention and other processes.

 

2.)Running Cost
The primary benefit of using a FOCO and FOFO Model is that the company offering the franchise investment option hands everyday expenses. So, the franchisee’s daily involvement is not required. On the other hand, FOCO and FOFO Model for franchises require everyday oversight and this can lead to operational redundancies. Since they are not likely to be familiar with the various daily expenses as well as their recordkeeping, running costs can get out of hand. Worse yet, improper accounts management can cause financial liabilities as well as legal ones. This will obviously adversely affect the brand reputation of the franchiser and may create similar problems for them as well. So, the FOCO model offers a better daily working solution for both franchisers and investors alike.Shorten with AI

3.)Profit Share

Both FOCO and FOFO models have their positives for establishing franchises. The key difference for profit sharing is that the FOCO model takes the liability off the investor. They get a share of the profits made by the company-owned cloud kitchen. This ensures the investor gets a steady source of income. Unlike this process, the FOFO model offers a potentially higher profit share to the investors. However, this is predicated on their business management proficiency. This is beneficial for only those who are willing to invest time and effort into churning out a high profit from their franchise.

4.) Promotion

Marketing activities are an essential part of any company’s operational cycle. With the FOCO model, the franchisee does not have to handle the marketing and promotional activities. For some cloud kitchens, getting involved in marketing activities can help bolster sales and increase profit. However, the FOFO model will require the franchisee to handle all businesses activities including marketing and promotion. This puts the burden of effort completely on the franchisee and they may not have good experience of it. Naturally, this would reduce the effectiveness of the marketing and promotion activities.

5.) Success
The long-term success of a company depends on the practical adaptability of a business. Franchises have the same story and if the operator does not have the right skill, they can lose business quickly. This problem is easily solved by the FOCO model which does not require the franchisee’s involvement. But with the FOFO model, the franchisee will need to invest time into the business. Otherwise, its long-term success is not certain.

Which FOCO Food and Beverage Franchise Should You Invest in 2021?

The Rolling Plate has one of the best FOCO and FOFO Model stories in the entire Indian F&B industry. Since starting in 2019, we have opened up 12 franchises and are verging on new establishments every new month. Naturally, our success has drawn a lot of attention and we are expecting an unprecedented interest in our franchise offerings in 2021. if you are looking for the best FnB industry investment opportunities in the market, TRP is the right one for you!

How Cloud Kitchens Work:

Customers can place their orders online using Food delivery websites. 

The kitchen cooks and prepares food only on quality and delivery.

Franchisees benefit from a pre-designed business model without the stress of managing physical sites.

 What is a Food Business Franchise?

The food business franchise is an enterprise that gives businessmen a chance to start and operate their food franchise business as well as being under a brand name that is already established. This model supplies businessmen with essential support, such as training, marketing, and operational guidance, to help them on the way of getting established in such a busy market for food items.

Also read:  Cloud Kitchen Food Franchise Business Model In India