Franchises Are Not Small Business?

Earlier today I posted about the exclusion of franchising from the upcoming American Express Small Business Saturday. In addition to my post on the franchisEssentials site and multiple social media, I also posted on LinkedIn within its Q & A forum. My objective was to learn what individuals outside franchising had to say. Well, the responses that have been coming in are quite interesting. Putting aside the American Express issue, I believe we, as franchise professionals, may need to do a much better job of educating the general public about franchising as evident by the responses. Read the following response and then, please share your thoughts.

“If the motive is to spur small business owners, then I see the logic in this. Franchisees aren’t small business owners. They primarily earn profit for the mega-brands they represent. That’s not a moral judgment, just a fact. Franchises are not small business. You’re the first person I’ve heard say that franchising is the cornerstone of small business. I’d disagree. It’s the antithesis of small business. Despite some fancy paperwork, a franchisee is earning money for someone else, just like an employee. The only difference is that risk is pushed to the franchisee. This isn’t small business. It’s big business writ large. Franchises are, by definition, independently owned, but there is nothing independent about their operation. Doing things yourself according to someone else’s strictly-enforced guidelines isn’t independence.”

For what it’s worth, the comment above is from an individual that promotes himself on LinkedIn within his profile as follows…

“I’m one of the founders of (company name withheld) and have over a decade of experience helping companies of all sizes multiply growth and outperform the competition. Business leaders who work with me get actionable strategic insight that contributes directly to the bottom line. I’ve worked with startups, small, medium and large enterprises and government agencies to set critical strategic goals and, more importantly, develop the roadmaps to get there. My focus is always on exploiting opportunities and eliminating obstacles wherever they are and not on employing a standard toolkit of proprietary models and methods.”

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9 thoughts on “Franchises Are Not Small Business?

  1. I think there are some clear differences between small businesses and franchises which, to the uninitiated, could cause confusion!
    I often get asked for business advice separately from franchise advice, yet most of us know they are essentially the same thing… Only with a few small differences.

  2. It seems the respondent you refer to has a bone to pick with franchising. It is possible, they find it hard to compete with the mega-brands that franchising represent…… This is a very flawed argument, in that there are a lot of smaller franchise systems with 50-100 outlets/franchisees. Franchises succeed against small businesses, yes due to their brand, and due to the (mostly) superior systems and processes they follow. These systems and standards are a minimum, and the vast majority of franchisees strive to better the standards their franchisor sets, as they want to succeed. Franchisees also make a significant contribution to their outlet and indeed the system with their capital and their time/efforts. Perhaps there are two potential lessons here. 1, Education to consumers, that franchising is all about the franchisees and that these people run their own small business. 2, A lesson for American Express. Franchisees are running small businesses. How would they react if all franchisees stopped accepting their cards for a week in protest, as they are not small businesses??

  3. Just silly, Paul.

    Of course franchisees are small business owners.

    This guy probably thinks that network marketing is a viable business model, too.

    (Well, it is actually. For 2% of the folks that do it.)

    The Franchise King®

  4. Yes, Susan, I agree that the general public is often unaware of what franchising is all about. Many just associate franchising with McDonalds and believe all franchises are of that size and financial strength. Obviously, that is far from the truth. However, even in the McDonalds comparison, the franchisee typically starts out as an individual owning and operating one restaurant with a significant sum of his or her own money at risk. Sure it’s true that an investment with McDonalds is safer than with a new franchise concept. But it is still an investment and there are always risks. Further, what many also don’t understand is the financial commitment (and risk) that entrepreneurs make in turning their small business into a franchise. At the end of the day, we (in franchising) just need to do a better job educating the general public.

    Thanks for your comments, Susan. Much appreciated!

  5. Paul, I agree with you that the general public (me included) doesn’t have a keen understanding of franchising. I think about the big franchises I have patronized and only recall one who had collateral on its restaurant wall that communicated there was a small business owner behind it. If we’re not reminded, we by default associate our local Subway as being run by the huge chain.

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