The model decides who carries the capital and the control
Choosing between FOFO, FOCO, COCO and master franchise is not a preference. It follows from your capital position, margin structure and how much operating control the category demands.
Who owns it and who runs it
FOFO — franchise owned, franchise operated
The partner invests and runs the unit. Lowest capital load for the brand and fastest expansion, but quality depends entirely on selection, training and audit discipline. Best for services and retail with a teachable SOP.
FOCO — franchise owned, company operated
The partner invests, the brand operates with its own staff and pays the partner a return. Protects experience quality and suits food and healthcare, but the brand carries the operating risk and payroll.
COCO — company owned, company operated
Fully owned units. Highest capital intensity and slowest growth, but essential for flagship locations, format testing and generating credible unit data before you franchise at all.
Master franchise
A partner buys development rights for a territory and may sub-franchise. Rapid geographic coverage with one relationship, at the cost of distance between the brand and the end unit.
Structures we use alongside the core four
Area development
A multi-unit operator commits to a schedule of openings in a defined territory without sub-franchising rights.
Shop-in-shop
A compact format inside an existing host retailer, sharing rent and footfall with lower setup cost.
Cloud or dark unit
Fulfilment-only unit with no customer-facing area, priced for delivery-led categories.
Conversion franchise
An independent operator rebrands into the network, bringing an existing site and customer base.
Joint venture unit
Brand and partner co-invest, typically used to enter an unproven geography with shared risk.
Managed hub and spoke
A company-run processing hub supporting franchise-owned collection points, as used by Dry 2 Clean.
The six questions that determine the model
- How much capital can the brand deploy without stalling the core business
- What percentage of the customer experience depends on discretionary staff judgement
- Whether the supply chain can serve a distant unit at the same cost
- How long a competent operator takes to become independently proficient
- Whether category regulation makes the brand liable for unit-level conduct
- What the exit path looks like if a partner underperforms or wants out
Model questions founders ask
Yes, and most mature networks do. A common pattern is COCO flagships in the home city, FOFO for expansion and FOCO for high-touch formats.
Not sure which model fits?
Send your category, current unit count and capital position for a preliminary view.