Franchising: One Size Does NOT Fit All

I have been alerted to new postings that appear on this site, ever since I registered a few months ago.  I have read most of the new postings with an open mind and an open heart to learn about the trials and tribulations of many of you.  Some of you have had pleasurable experiences as a franchise owner, and some of you have not.

When I went through a divorce a few years ago, I learned it wasn't the principles of marriage that did not work for me - it was my poor selection process that failed me.  I chose a relationship for many of the wrong reasons, much like some people have chosen a franchise for, perhaps, the wrong reasons as well.

Franchising is an even more complicated environment.  It is not an industry because there is no government SIC code attributed to it.  Yet, people try to make an industry out of it.  There is no such thing as "franchise" law, yet lawyers tell you there is.  A good lawyer, knowledgeable about franchising, is simply knowledgeable about disclosure requirements, contract law, trademark, anti-trust and corporate law, as well as the registration process required by some states.

Franchising is an Indirect Channel of Distribution.  It is a market penetration strategy used by companies in over 60 different industries.  These companies understand they want to or need to grow and gain marketshare.  They also understand they lack the financial resources to build out all of the necessary locations on their own.  Even if some of these companies had the money, they might still lack the human capital, the people, to staff the locations they just paid for.  Also, many of these companies might possess the money and the people, but they do not have the time it takes to build, staff and open new locations fast enough because someone else might come in and capture precious market share, or at least impede their growth.  

For the past 35 years, I have worked with companies of all sizes and shapes and in many different industries in their attempt to reach maximum market penetration.  Many have succeeded and, honestly, many have not.  For the ones that have not succeeded, it was not that franchising failed them . . . but rather they failed franchising.  As consultants, we can only guide them in the right direction; we cannot steer the vehicle.

What I have also learned, however, and most importantly, is one size does not fit all. 

What works for one company probably won’t work for another because of a multitude of reasons.  In fact, to quantify the franchise development process and identify the critical areas of a business that needs attention, we have created what we call the Eight Cylinders of Franchising.  Just like the cylinders in your automobile, each of them need to be working together to make the vehicle move and, hopefully, move in the right direction. 

Unlike the dashboard of your car that has warning lights, a business or franchise doesn’t, so the owners are responsible for making sure the business cylinders are “tuned-up.” The cylinders include Operations, Marketing and Advertising, Legal, Sales, Financial, Organizational and Human Resources, IT or Information Technology, and Imaging, Branding and Positioning.  A prospective franchisee needs to know about these cylinders as they evaluate a company.  A franchise company, on the other hand, needs to constantly evaluate its performance in each of the cylinders.

Further, to complicate the “franchising” issue even more, each franchisor has the right to choose a variation of a growth strategy.  Meaning, some use single unit franchising as a means to grow, while others use mullti-unit or area development agreements and so on.

Another lesson I have learned, from creating concepts from scratch and from working with hundreds of franchise companies all over the world is that you could have the best business model, but if you don’t have the right type of person (franchisee) as the operator it won’t work.  Now, don’t get alarmed, this does not mean there is a right and a wrong franchisees type.  What this means, however, is that the value systems and competencies of an individual vary from person to person.  Some people are good at sales and marketing and don’t like the detail, while others are good at the detail and don’t like sales and marketing because a major part of their value system is that they don’t like to influence others.  We measure and quantify the value systems of an individual through a behavioral model we created called Franchise Navigator.  Once we know the type of person we want for a particular franchise, we do everything we can to alienate those we don’t want and to attract, through an “attraction strategy,” those we do want.  We have made this process very scientific so the disasters don’t happen because our clients are focused in on the selection process.  This brings me to today’s posting.

I read with astonishment and, ok, some amusement, Joe Matthews’ posting, where he says:“If you were to ask a franchise candidate, "Why do you want to start a business?" You are first going to hear such things as...

• I want more control
• More flexibility
• More challenge
• More time with the family
• Better work/life balance

He goes on to say that rarely does the prospect mention income.

Well, I would counter and say, “Joe, some people may say that but, trust me, there are Achiever/Accomplishers out there who want and demand a bottom line to their business.  They may not be single unit franchisees that you must be accustomed to.  In our Franchise Navigator profiling process there is, in fact, a profile we call, Belonger/Associators, who are not driven by money at all.  And, there are also Emulator/Influencers who are driven by prestige as well as Societally Aware people who buy franchises because of their inner need to contribute.  Each of these profiles is very different and each one is a candidate to buy a franchise.  The problems occur when they buy the wrong type of franchise.

Joe, also has come up with a memorable list of “good” franchises.  

I honestly haven’t a clue what that means or what constitutes a ‘good” franchise.  In 1988, when I created the Franchise Gold 100 for Success Magazine we had very objective criteria that we measured franchise companies.  What is the basis of calling one franchise a good one and not others?  I cannot emphasize enough, and those of you out there who know me know that I have been saying this for almost 30 years: “Franchising is not a one size fits all” solution.  Please don’t lump a very serious and extremely complicated process into one generic bucket or make generic statements like one is good and others are not.  

Joe, either go get more coffee or loosen the drawstrings on your pajamas because they must be too tight! 

Craig Slavin
Franchise Architects
2275 Half Day Road, Suite 350
Bannockburn, Illinois 60015 USA                                                                                                   

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