Growth Through Franchised Versus Company Owned Units
Deciding between franchise or company owned growth stymies thousands of successful business owners. It’s a perplexing issue, but for examination here’s some food for thought.
Question #1. Is it a proven concept?
No business should be franchised if the system is not currently productive. A business without a firm system locked in concrete is not a good franchise candidate. Of course, tweaks required to sharpen all businesses are never a negative.
Question #2. Franchising versus company units have different relationship concerns
Franchisees are not employees. They cannot be viewed as such, but if they are viewed in such a way, that attitude will ruin relationships. A ‘commander in chief’ attitude works in company owned systems, but not in franchising. Good relationships are the backbone of successful franchising. One must understand their personality and personal management style.
Question #3. Can a combination work?
Quality franchise relationships are mostly a function of trust and performance. Let’s assume that you are my franchisor and I am your franchisee. I would expect you to be in the business of franchising not corporate expansion. You are consciously or unconsciously a competitor if you’re opening your own units. Great franchisors don’t straddle two horses. First decide what business you’re in, then think about whether or not to franchise.
We’re of the opinion that franchisors should place franchisees as their top priority.
Question #4. Franchise or company owned growth as a matter of geography
Franchising in and of itself is just another form of distribution. Products and services best managed in a tight geographic space and demanding corporate attention lean toward corporate style. Large geographic spaces might be better left to franchised outlets. Not only should franchisees provide their own capital for expansion. They should be able to provide personnel management assets as well.