Would the world be a better place without franchising?

franchising-chart1It is unfortunate the franchise industry continues to be (and always will be) subjected to bad press because of franchisee failures resulting in lost family savings including the children’s college fund. It’s unfortunate because bad press sells and society has evolved into accident watchers. Need I say “rubber necking on the highway?”

Not to mention that society has become full of gossipers. When was the last time you heard someone in the neighborhood say “Did you know Joe and Mary have been married for thirty happy years?” Such a positive comment is usually left unspoken, at best. Instead, you would be more likely to hear, “Did you know that Joe cheated on Mary.” Well, I think you see the point.

Would it be better for the press to report franchisee failure due to the franchisee not following the system, being undercapitalized or because of serious substance abuse problems? I seriously doubt it. But wouldn’t that at least educate the public? The same public that is looking at franchising as a career alternative or their first step into entrepreneurship. I know, that’s never going to happen either but it would shed a light on the truth.

I haven’t even touched upon less than reputable franchisors, undercapitalized franchise concepts and poor lending practices. Regardless, of how much government tries to protect potential franchise candidates, the government and the industry itself cannot effectively police every franchise professional, every franchise company and every aspect of commercial lending. It’s just not feasible and possible.

So, the ultimate answer lies in dedicating more time and resources in positively publicizing franchise concepts and the industry itself. As well, promoting efforts and results in working with community and non-profit groups would go a long way towards positive public sentiment.

Basically, we (reputable franchisors, franchise professionals and the industry as a whole), need to create a publicity bank that can be withdrawn from as a precaution and hedge against the potential and reality of negative publicity. And just like the cash reserves insurance companies are required to have on hand for future claims, multiple sources and instances of positive publicity must be accumulated to counter the few negative counts of publicity that the media so enthusiastically reports.

The world would not be a better place without franchising. We just need to inform and remind people of the industry’s efforts and accomplishments so the world knows how franchising has actually made the world a better place and will continue to do so for years to come.

The challenge is that in today’s uncertain economic environment, where franchisors continue to cut budgets, the possibility of dedicating more resources towards positive publicity is slim to none. Certainly, it won’t be done in the traditional sense.

But it can be achieved, as it can also be achieved for marketing, development and operations, by exploring non-traditional strategies, methods and processes which are essential to future franchise growth and success..at all levels.

4 thoughts on “Would the world be a better place without franchising?

  1. Just ran across your blog and of course the world would not be a better place without franchising. But the world would be a better place without ignorance you should I say misguided knowledge. Of course there are some franchisors that give a bad name to franchising but that is true with all aspects of life. One of the biggest problems in franchising is franchisees not being able to accept their own failures and mismanaged affairs placing all responsiblity on the franchisor rather than evaluating the circumstances honestly.

    Franchising is not a proof positive road to success. Also Franchisors and Franchisees are not one big happy family and their objectives and goals, especialy short term, are going to conflict with each other at times and it takes an understanding of this to navigate the troubled waters. Most Franchisors time horizon on making money is much longer than franchisees. Franchisees typicaly need to ensure they maintain good profit margins and more importantly positive cash flow just to stay alive. If they are put into a negative cash flow situation for any amount of time they are in danger of going under. Since this is the case it is vitaly important franchisees understand their budget and profit and loss and understand the key factors that will effect them. Surprisingly that sounds so simple but is not the case and a lot of franchisees wonder around hoping they make a profit and when it does not happen they blame the franchisor for a bad business model.

    Yes I believe more now than ever, franchisors need to educate the franchisees on budget and profit and loss. Even though there are differences in objectives and goals a franchisee that understands their budget completely and knows what affects it and how it is affected will be more likely to succeed than one who has no clue. But prospective franchisees need to educate themselves before they enter the world of franchising or business in general and get a solid understanding of budgeting and Profit and Loss, since this is one of the most basic items you will need to succeed in business and without it you will just be lucky if you survive for any amount of time.

    Education or should I say self educating is the tool and the solution, but in this country educating ones self (taking responsibility) seems to have fallen to the way side and been replaced with blaming someone else for ones own misguided mistakes!!! Franchising is a great tool and a great way to succeed in business. It is not guranteed and a bad business person will just as likely fail running a franchise as they are a startup they create. They may last a little longer in a franchise system just because some of the franchise guidlines will protect them from themselves but no system will protect a bad business person from themselves entirely and bad business will kill you every time!!

  2. Thank you for your response. I’m a firm believer in telling it like it is. Also, I believe in the necessity of interdependent franchise relationships. Accepting a check from any beating heart and then blaming the franchisee entirely for failure is certainly not conducive to such a relationship. Franchising is a good business model and should continue to be used to help grow the economy. I just wish franchisors were held more accountable so franchising doesn’t go the way of the subprime mortgage industry!

  3. Paul, I’ve become an avid reader of your blog. You seem to be asking/answering questions about franchising that no one else has addressed. Congrats. Your thesis question, “would the world be a better place without franchising?” can be answer yes if we edit the statement: the world would be a better place if franchisors didn’t need to sell franchises in order to stay in business. There are some franchisors who keep the lights on with new franchise fees (kind of like a Ponzi scheme). I know a franchise that accepts virtually anyone with a checkbook even if they have no real prospect of success because the brand is unknown and unsupported. When the stores go south, the franchisor tells the franchise they need to market and promote more, and the franchise says, “Huh?”

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