Not long ago someone setting up a franchise system wondered and was unconvinced that the franchise model was indeed a successful concept. They wondered if Franchises have proved to be successful. Okay, so let's look at this concept for a second shall we, as it is a good intellectual dialogue to discuss.
Here is a thought; The US is a franchise system. Is it successful, YES, and in spite of its self and self destructive bureaucratic behavior; consider if you will that the Federal Government is the Franchisor, the states are the Master Franchises, the counties are the regional development folks and the cities are the franchisees. Well that leaves you and I and all the citizens as the customers.
Is the US and its layers of government a successful enterprise to run a civilization? For instance, we have a 17 trillion dollar economy, 303 million people, largest percentage of middle class for any large nation. That's successful, and we have clean water, power, transportation, schools, healthy environment (for the most part), it's a great place to live and something to be proud of all your adult life.
In my opinion, the biggest problem with franchising is the over regulation and lawyers, but also the difficulty in keeping everyone happy. Franchisees do better when economies of scale lower their cost of goods sold. But, the franchisor wants to make a profit too and continued growth on a finite, but growing customer base, his franchisees. Then the shareholders want continued exponential growth, which is impossible due to cannibalism (competing stores of the same system). The consumers want the best price too. So, you have to split your objectives to keep the 4 groups happy;
A.) The franchisees;
B.) The Customers;
C.) The Franchisors and;
D.) The Shareholders if a public company.
Usually, this hurts the franchisees first, when cuts are made to increase the profits of the franchisor, and if franchisee associations within the franchise system get together to form unions, then they take more and the franchisor is hurt and thus, the brand name dwindles and the support structure is lessened, not good. If the franchisees are forced to raise prices due to increased costs, customers start to leave. These are the inherent problems with franchising, even though it is probably the most successful business and organizational format ever created.
"Lance Winslow" - Online Blog Content Service. If you have innovative thoughts and unique perspectives, come think with Lance; http://www.WorldThinkTank.net/
