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Why Franchising is Not Necessarily a Good Fit for Entrepreneurs

Choose franchises with care

…But for others a franchise proves far too restrictive. They have
thought long and hard about their own ideas to improve the business and
don’t want someone saying “no” when they want to implement them.

One example that comes to mind is someone who bought a franchise in
a sandwich shop chain and wanted to install a coffee machine.

No one else in the chain had a machine, and the franchisor had a definite view that the status quo should prevail.

So you had this fight between the franchisee and franchisor over a
cappuccino machine with the latter having to spend time and effort
convincing the franchisee that it wasn’t commercially smart.

What this means is that people have to be “culturally comfortable” with the franchise.

You will live and breathe this business so you had better like it. Don’t buy a McDonald’s franchise if you hate hamburgers!

About Ryan Knoll

Attorney and advisor with an interest in franchising. Feel free to email me comments and questions on the "Contact Us" page.
3 comments
JP
JP

Fiscal Franchisor Wrote: All good points John. I think the overriding concern for franchisors is quality control. If it were possible to let franchisees innovate and still keep the store essence the same and increase sales, franchisors wouldn’t restrict those activities. But, franchisees would make the same amateur mistakes, and take the franchise brand down with it in some instances. > While that may be true in many cases, in this particular case what we're talking about is a coffee machine - hardly likely to affect quality control. Maybe, Fiscal Franchisor, you could reconsider exactly what an amateur mistake might look like, because in this case it really doesn't seem to apply.

Fiscal Franchisor
Fiscal Franchisor

[quote comment="10054"]Good point. Franchising is not usually a good fit for the true entrepreneur. But here's what I find interesting. So you own a sandwich shop and you want to put in a coffee machine. Great. But why? Just because you want to? Wouldn't it make sense first to determine that coffee will make you a profit? And if it would, wouldn't the franchisor want you to sell coffee (because the franchisor is going to get a piece of your coffee sales)? Must be a very good reason why Subway doesn't sell coffee. . . . The challenge for the entrepreneur is constantly creating. Coming up with ideas. Testing them. Doing that, most folks runs out of money. And then the "experts" will say they failed because they were undercapitalized. Or was it because they didn't have a tested system to follow and save them from their own experimentation (or ignorance)? But then, true entrepreneurs don't want to follow systems, they want to create them. And thank God they do or there wouldn't be any franchises![/quote] All good points John. I think the overriding concern for franchisors is quality control. If it were possible to let franchisees innovate and still keep the store essence the same and increase sales, franchisors wouldn't restrict those activities. But, franchisees would make the same amateur mistakes, and take the franchise brand down with it in some instances.

John
John

Good point. Franchising is not usually a good fit for the true entrepreneur. But here's what I find interesting. So you own a sandwich shop and you want to put in a coffee machine. Great. But why? Just because you want to? Wouldn't it make sense first to determine that coffee will make you a profit? And if it would, wouldn't the franchisor want you to sell coffee (because the franchisor is going to get a piece of your coffee sales)? Must be a very good reason why Subway doesn't sell coffee. . . . The challenge for the entrepreneur is constantly creating. Coming up with ideas. Testing them. Doing that, most folks runs out of money. And then the "experts" will say they failed because they were undercapitalized. Or was it because they didn't have a tested system to follow and save them from their own experimentation (or ignorance)? But then, true entrepreneurs don't want to follow systems, they want to create them. And thank God they do or there wouldn't be any franchises!