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Franchising provides a "proven franchise business system" is a myth I hear from prospective franchisees all the time. It’s one of the most compelling reasons why an individual decides to buy a franchise.
Franchisors aren’t just selling their name and logo to prospective franchisees – they’re selling their operating manual, which many claim is a “proven business system”.
What is a proven franchise business system? I still haven’t figured this one out. A lot of franchisees leap to the conclusion that a proven business system means that a franchisor has spent countless years developing an ironclad recipe for success, which they then pass on to franchisees. This system is “proven”, because the franchisor has apparently worked out all the bugs and knows exactly what a franchisee needs to do to be successful, from construction, purchasing and cost controls to advertising and what shade to paint the walls.
Not so fast!
Franchising as a concept does not promise proven performance; rather, buying a franchise from a proven performer is a script for success.
Another important thing to keep in mind is that “proven success” today does not guarantee proven success tomorrow. The world is constantly changing, along with consumer tastes, competition and technology. What works today might not work tomorrow and will almost certainly not work precisely the same way in ten years.
The real franchising myth here is the notion or suggestion that a “proven franchise business system” even exists. The best franchisors are constantly updating and evolving their operating manuals, marketing and branding in order to keep up with the evolving dynamics of their industry. The best franchise brands have a developed track record for staying ahead of the curve, keeping fresh and adapting to changing customer needs and appetites.
Again, let’s take a quick test. Thirty years ago what business did McDonald’s focus on? If you said hamburgers, shakes and fries you would be right on. And what does McDonald’s marketing plan look like today? Hmm, the lead product now seems to be McCafe’! McDonald’s has never stood the test of time by standing still. Truly, its ‘proven system’ is to continually evolve, modernize and change!
Moreover, there are many franchisors that launch into franchising without adequate preparation or an established track record. Instead of spending countless years developing a bulletproof operating system, these companies use franchising as a growth method and test their systems along the way.
Current franchisees must hold their franchisor responsible for providing a business model that makes profitability possible. If the operating manual is flawed or places undue constraints on the franchisees, then franchise owners would do well to join together and direct their concerns to their franchisor with a united voice. I suggest reading the AAFD’s Fair Franchising Standards to understand what a strong franchisor-franchisee relationship looks like.
This is part six of a nine part series exposing franchising myths.
The content in this blog post is based in part on Chapter One of The Franchise Fraud, written by Robert Purvin. The Franchise Fraud is available for purchase in print and for the Kindle on Amazon.