Choosing the Right Franchise Model – FOFO vs FOCO vs COCO

Entering a business can be daunting, but franchise models offer one of the smoothest ways to transition into ownership—without the stress of building from scratch. However, not all franchises operate the same way. Some offer full ownership, while others follow a company-managed approach. So, how do you determine what aligns best with your time, budget, and risk appetite? Let’s explore the different types of franchise models to help you make an informed decision.

What Are the Different Franchise Models?

In the world of franchising, there are broadly three franchise models: FOFO, FOCO, and COCO. Each of these models come with a different set of terms for ownership, control, and revenue-sharing. While models like FOFO give you control in terms of operations and product quality, you benefit from the COCO model in terms of the stability and low-risk setup.  

FOFO – Franchise-Owned Franchise-Operated

Ownership: The franchisee (an individual or business) owns the store.

Operations: The franchisee is responsible for day-to-day management, including hiring staff, handling sales, and customer service.

Revenue Model: The franchisor earns through royalties (a percentage of revenue) or a fixed fee, while the franchisee keeps the store’s profits.

Support from Franchisor: The franchisor provides branding, operational guidelines, product supply, and marketing assistance.

This is suitable for those who want to start off with a trusted brand and leverage their operational excellence with low risk and high stability. This also requires a minimal setup cost in comparison to other models.

Some of the popular examples include food outlet franchises like the Domino’s , KFC and Subway where a standard food item tastes same all across the globe owing tot he standardised practices set up by the franchisor.

FOCO – Franchise-Owned Company-Operated

Ownership: The franchisee sets up the store and owns the physical assets.

Operations: The franchisor (company) takes full control of running the store, hiring staff, managing inventory, and ensuring service quality.

Revenue Model: The franchisee earns a share of the revenue or a fixed return, while the company retains operational profits.

Support from Franchisor: Since the company manages the business, it ensures brand consistency, customer experience, and efficiency.

This model is ideal for individuals who want to own a business but prefer a hands-off approach. It works well for premium brands and service-focused industries that require strict quality control.

Example: Many luxury fashion brands, Starbucks (select locations), and five-star hotel chains follow the FOCO model to maintain premium customer experience and service consistency.

COCO – Company-Owned Company-Operated

Ownership: The company (franchisor) owns and sets up the store.

Operations: The company directly manages all aspects of the business, from staffing to inventory and customer service.

Revenue Model: Since the company controls everything, all profits and losses remain within the organization.

Support from Franchisor: Not applicable, as the franchisor and operator are the same entity.

This model is best suited for large corporations that want full control over branding, customer experience, and operational efficiency. It requires significant capital but ensures a consistent brand image.

Example: Brands like Apple, Nike, and Reliance Retail use the COCO model for flagship stores to maintain total control over their operations.

Which Model Should You Choose?

Each franchise model has its own benefits and risks, so your choice should depend on:

• Setup Cost Capacity – FOCO allows passive income, while FOFO requires active involvement.

• Level of Control You Want – FOFO gives independence, while COCO ensures company-driven operations.

• Brand Consistency Needs – FOCO and COCO ensure strict quality control, whereas FOFO relies on the franchisee’s efficiency.

Pros and Cons of Each Franchise Model

Franchise Model	Pros	Cons
FOFO (Franchise-Owned Franchise-Operated)	- Lower setup cost for the brand, faster expansion. - Franchisee has full control over operations. - Ideal for entrepreneurs who want independence.	- Quality and service consistency can vary. - Franchisee bears the operational risks. - Requires strong brand training and support.
FOCO (Franchise-Owned Company-Operated)	- Less risk for the franchisee as the brand manages operations. - Ensures better quality control and brand consistency. - Suitable for individuals who prefer a hands-off approach to business ownership..	- Lower profit margins for the franchisee as earnings are shared. - Expansion may be slower due to company involvement. - Franchisee has no direct control over store management.
COCO (Company-Owned Company-Operated)	- Complete control over operations, branding, and customer experience. - Consistent service quality and standardized processes. - Ideal for premium positioning and long-term brand growth.	- High capital setup cost required. - Slower expansion compared to FOFO and FOCO models. - The company bears full operational risks and costs.

Which Franchise Model is Best for You?

Before starting in a franchise, it’s crucial to evaluate which model aligns with your goals.

Ask Yourself:

1. Do you want full control over daily operations, or would you prefer brand-managed oversight?

2. Are you willing to take on financial and operational risks for higher potential profits?

3. How much capital do you have to put in?

   
   

Successful Franchise Examples:

• FOFO: Domino’s India follows this model, allowing franchisees operational independence.

• FOCO: Bikanervala uses FOCO to maintain product quality while reducing franchisee risks.

• COCO: Apple runs its stores under the COCO model for strict brand consistency.

How to Start a Franchise Business in India

Starting a franchise business in India requires a balance of due diligence, Setup cost, and the right brand partnership. Here’s how you can successfully launch one:

1. Fulfill the Legal & Regulatory Framework

• Register your business as per Indian laws.

• Secure franchise licenses, including FSSAI (for food), GST, and business permits.

• Review the franchise agreement for revenue-sharing, operational rights, and brand compliance.

2. Choose the Right Franchise Opportunity

• Analyze market trends to select a high-demand industry.

• Compare FOFO, FOCO, and COCO models to find what fits your budget and risk appetite.

• Research brands with a strong track record and franchisor support.

3. Location and Capital Planning

• Identify prime real estate locations with high foot traffic.

• Arrange funding via personal savings, bank loans, or franchise financing programs.

4. Launch and Scale Your Business

• Complete franchisor training and set up store as per brand guidelines.

• Use local marketing strategies like digital ads and launch events.

• Monitor performance and optimize operations for long-term profitability.

While franchising is a great entry point into the world of business, choosing the right kind of franchise model that fits your Setup cost, risk level, and the level of control and independence you seek, is essential for making an informed decision. So, assess your goals, and choose wisely!