What’s wrong with franchising in 2012? Perhaps I would invoke the words of Charles Dickens and assert that franchising is experiencing “the best of times and the worst of times."
When franchisee association leaders gathered in Washington last month for the 2011 CFA Day Forum, they were witness to an important piece of franchising history.
The economic rationale for franchising is this: the franchisor picks local experts as franchisees; these local operators must, on average, be experts otherwise the franchisor would be better off with a company store.
More and more my practice seems to be shifting to meeting the challenges presented to franchisees by opportunistic franchisors who see the cure for all ills as taking more money out of the relationship with their franchisees.
A few months ago I suggested the use of financial modeling by franchisors as a means for rational self governance of several critical aspects of the franchise relationship, including measurement of the investment worthiness of a franchise system and measurement of the extent to which a contemplated program could be shown before the fact to impact upon franchisee profitability.
Effective and respected independent franchisee associations that are recognized participants in a collaborative franchise culture are deserving of significant marketplace recognition.
