Franchise Companies

Not every company engages in the franchise business model. There are good reasons why a company would be ill-suited to franchising: their work is highly specialized and technical, requires large-scale manufacturing facilities, requires people with degrees, or simply that they prefer to have absolute control of each location rather than loose control over a scattered realm. In the case of technology-oriented companies such as software design, their product is electronic and easily delivered all over the world, so why not keep the whole crew at one centralized location?

For that matter, you might be wondering why companies outsource at all. Why settle for a small percentage of the profits when they can just run their own locations and get all of it? The answer is many practical reasons:

* It’s efficient. Consider that regional managers for a non-franchised business perform many of the same functions that a franchisee owner would. Keeping all of a business’ locations under one, tight, central control is needlessly encumbering.

* It’s a fast way to grow. Really, companies which never considered franchising before are doing it now because they have to just to compete. In the restaurant industry in particular, the companies that didn’t take advantage of the franchise model soon found themselves outnumbered by the companies which cheerfully franchised their locations.

* It adds a personal touch. When you’re a manager hired and trained by a company, you may get sent to some remote location where you’re just a representative of a faceless company. A franchised owner, on the other hand, is much more savvy to the local region. They have the right accent, they know people in the town, they have connections, and they know the market better.

* There are intangible benefits. Besides getting a percentage of the profits, the company selling franchise licenses gets to enjoy a greater market presence. They get to brag about how many locations they have across the country. A well-run business in the hands of a skilled franchisee spreads goodwill for the company name, which reflects well on all of the company’s locations.

* Innovation. In many cases, the person who is in charge of their own enterprise gets a new idea, tries it out, finds that it boosts business, and shares that new plan with the rest of the company. In many cases, independent franchise owners have a considerable amount of say in the rules and setting of company policy.

In some cases, especially with restaurants and retail stores, the locations are 100% franchise owned. When that happens, the franchisees frequently form a sort of union or organization. In a way, the franchise owners tend to be seen as more of the center of power for a company, with the initial company being largely a loose figurehead.

So much has been wrought through the franchise model that companies which specialize in running franchises for other companies have begun to form. If you’re a business owner who wants to sell franchise licenses, but who lacks the time or resources to get started, these companies come in and offer to do the heavy lifting for you. If this trend continues, we may see the model of franchising itself take over from the old centralized corporate model. We may see it become the dominant face of commerce itself.