So You Want to Buy a Franchise...But What Does "Franchise" Mean?

What's a franchise? From Street Smart Franchising

The Webster’s Dictionary defines “franchise” as “the right or license granted to an individual or group to market a company's goods or services in a particular territory.”  Webster’s defines franchising in terms of a legal business relationship.  This is indeed an important aspect of franchising, but doesn’t tell the whole story.  In a popular book on franchising, the writers define franchising as “a system for expanding and distributing goods and services-and an opportunity to operate a business under a recognized brand name.”  In other words, franchising is a distribution model for getting products and services to market and as a business opportunity.  This again is an important aspect, but doesn’t capture the essence of what franchising really is or could be.

For those who have made a career of either owning franchises or working for franchisors and supporting franchisees, franchising transcends legal and business relationships.  Franchising is a personal relationship-often a deep personal relationship-a brotherhood or sisterhood.  In other words, franchising when done right creates a community.  Franchising melts down into a business relationship only when the personal relationships break down.  Franchising further melts down into a legal relationship only when the business relationship blows up.  If franchisees and franchisors only define their relationship in terms of legal and business distinctions, they aren’t thinking big enough.  Franchising is a sacred bond between franchisees and franchisors.  Each has a mission critical job to do; which has great impact on the other. 

The franchisees job is to serve their customers within their market areas to the best of their ability consistent with the integrity and original intent of the franchisor.  Not only should franchisees deliver the product and service according to the standards and guidelines of the franchisor, so customers experience their original quality, but also in the same spirit as the franchisor, so customers experience their original purpose. 

The best definition of franchising I have ever found oddly enough was written 2,000 years ago by the Apostle Paul in a letter to the church of Corinth.  As you read this, consider that a franchise is one body consisting of the franchisor, franchisees, suppliers and customers.

The body (franchise) does not consist of one member but of many.  If the foot would say, "Because I am not a hand, I do not belong to the body," that would not make it any less a part of the body. And if the ear would say, "Because I am not an eye, I do not belong to the body," that would not make it any less a part of the body. If the whole body were an eye, where would the hearing be? If the whole body were hearing, where would the sense of smell be?...If all were a single member, where would the body be? As it is, there are many members, yet one body.  The eye cannot say to the hand, "I have no need of you," nor again the head to the feet, "I have no need of you." On the contrary, the members of the body that seem to be weaker are indispensable…But God has so arranged the body, giving the greater honor to the inferior member, that there may be no dissension within the body, but the members may have the same care for one another. If one member suffers, all suffer together with it; if one member is honored, all rejoice together with it.

In its purest form, franchisees, franchisors and suppliers work together as one body, each with its own job to do and committed to the success of the other members.  This is what is possible and attainable.

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By Joe Mathews, Franchise Performance Group. Co-Author of Street Smart Franchising