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Franchise, Crowdsourcing, and Retailer Business Models

A business model is simply the strategy chosen by a business owner to make money and deliver value to customers. Determining a business model requires the description of products or services, target market, as well as required expenses. They are numerous types of business models, which are categorized as traditional and modern types. In this era of globalization, it is important to focus on modern business models that are more innovative and applicable in various target markets. This discussion will focus on three types of modern business models, which include: franchise model, crowdsourcing model, and retailer model.

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The franchise business model is one of the common types of businesses conducted worldwide. Benjamin Franklin started the modern-day franchising businesses in the print industry. He was the franchisor and Thomas Whitmarsh were the franchisee (Mon, 2011, p.74). A Franchisee operates the business using the trademarks, branding, and business model of their franchisor. The two parties are involved in a legal and commercial relationship, whereby the franchisor licenses the franchisee to use their trade name as well as operating systems. In exchange, the franchisee signs the franchise agreement and pays a royalty fee to the franchisor. A franchisee benefits from this business model in that they get training, support, as well as operating instructions from the franchisor. Some of the commonly known franchise businesses include; Ace Hardware, McDonald’s, and Allstate.

Additionally, the retailer business model is that other commonly used by investors. It is referred to as retailer business since it is the last link of the supply chain connecting the company to the final product or service consumer. A retailer buys products from the distributor and sells them to consumers at a price that covers their expenses and gives profit. Retailers can specialize in a specific line of goods such as clothing or provide a wide range of products to customers. Success in the retail business model depends on significant improvements in the operating system as well as the value proposition. A strategic operating model in a retail business supports the value proposition by fulfilling the consumer pledges. The strategies involve the cost model, value chain structure, as well as organizational processes. Customer discovery is key to retailer business optimization. Examples of retailer business models include; Home Depot, Target, and Nordstrom.

Another type of business model is crowdsourcing. Investors in this model are involved in seeking knowledge, services and goods from a range of providers, and connecting them with others requiring the knowledge, services, and goods (Chanal & Caron-Fasan, 2008, p.6). Crowdsourcing businesses are mostly conducted through online platforms, such as this social media, online apps, and other dedicated crowdsourcing platforms. Freelancing is one of the commonly known crowdsourcing businesses where a large body of people provides services to consumers through online platforms. Investment in crowdsourcing incorporates attracting large numbers of people providing content to one’s online site and matching content providers to customers requiring their services. Fiverr is a great example of a crowdsourcing company where experts provide services such as art, writing, photography, animation and many others to customers.

Crowdsourcing is the best business model among the three. My business idea is to create a freelance site that provides numerous services to customers. Crowdsourcing is associated with a low cost of investment. It operates on sourcing services from freelancers at a fee and delivering them to customers to make a profit without necessarily having paid employees. Additionally, it is easy to harness a wide pull of expertise which increases the speed of service delivery. Moreover, it enhances business diversity for small investors by connecting people from different backgrounds, values, as well as life experiences.


Chanal, V., & Caron-Fasan, M. L. (2008). How to Invent a New Business Model Based on Crowdsourcing: The Crowdspirit® case. In Conférence de l’Association Internationale de Management Stratégique (pp. 1-27).

Mon, S. S. (2011). Analysis on Laws Relating to Franchise Business in Myanmar. Studies, 3(1), 174-192.

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