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Blue MauMau: In your opinion what companies are some of the best franchisors and why?
Bob Purvin: This is a question that I am always asked by reporters, and they are disappointed when my reply is:
BMM: Uh-huh . . . but you know what is being asked.
Purvin: When I am confined to my selection of 'retail franchises' [business-format franchises], the question becomes much harder for me to answer, and the answer will vary based upon many variable goals: new or proven concept, established product or the latest fad, great profit potential or reliable cash flow, great collaborative relationship or strict adherence to a well maintained system, and whether the quality of the brand trumps the fairness of the franchise agreement.
Knowing what I know about franchising in today's marketplace, there is very little I would recommend because of the indentured characteristics of most franchise agreements. But I would limit my search to systems that recognize, respect and negotiate with an independent franchisee association, that have a franchise agreement that respects franchisee interests, and that has a reputation for collaborating with its franchisee network. From there I would look at either established brands (I would also consider a great new concept IF the risks were justified by the potential rewards), the projected profitability, the assurances of product and marketing efficiencies, and if the business would be 'fun.'
Taking all of this into consideration, here are some of the brands that I have looked at that might entice me.
BMM: Wow. Almost half of the items on your list are hotel franchise chains. Why is a list of the best and fairest franchise opportunities so dominated by hotels?
Purvin: Historically, hotels were a stronger segment in franchising. I have done a lot of analysis about why hotels tend to top fair franchisors. I conclude that the typical hotel owner has a lot of money and has a lot of real estate so he is able to afford attorneys. That class of investor has been unwilling to sign indentured servitude agreements. These people stood up for themselves and weren’t going to buy into deals that often retail business people did.
BMM: Your answer is loaded with issues that we touch on in some depth later in the series. For now, I want to thank you for your candor in revealing your thoughts on the best franchises.