Franchising is not the perfect expansion model for all.
When a business considers its next phase of development, franchising often comes into the discussion. That should not come as a surprise; when you look at the 12 most recognised food restaurant logos in the world,1 11 of them are franchised brands, 9 out of 10 of the most valuable fast-food brands are franchised,2 and roughly half of the world’s top retailers offer a franchise or license model.3
Franchising as a growth model is not just a consideration for emerging brands. Recently, I was asked to consult with a specialty clothing manufacturer with presence in 30 countries; they are considering franchising as a possible avenue for their next growth phase.
What is franchising?
If you are going to evaluate franchising as a potential growth vehicle, then first you have to understand what franchising is. There is no one universally accepted legal definition of a franchise relationship. The UK Common Law System does not have an official definition of franchising at all, the Consumer Protection Act (2008) of South Africa essentially defines franchisees as consumers, with many of the same protections, whereas Italy defines a franchise as an agreement between two legally and economically independent entities for mutual consideration.4 Though there is not a single legal definition, a good starting point for discussion is that a franchise relationship, at its core, is one built around a licence agreement and services agreement. One party (the franchisor) licenses to the other party (the franchisee) certain rights in respect to its trademarks, trade name, business systems, etc., and also agrees to provide certain services. The other party (the franchisee) typically agrees to abide by certain rules regarding the conduct of its business, and also to pay the licensing party some fee or set of fees.
Considerations of franchising
This story is from the December 2018 edition of Indian Management.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the December 2018 edition of Indian Management.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Trust is a must
Trust a belief in the abilities, integrity, values, and character of any organisation is one of the most important management principles.
Listen To Your Customers
A good customer experience management strategy will not just help retain existing customers but also attract new ones.
The hand that feeds
Providing free meals to employees is an effective way to increase engagement and boost productivity.
Survival secrets
Thrive at the workplace with these simple adaptations.
Plan backwards
Pioneer in the venture capital and private equity fields and co-founder of four transformational private equity firms, Bryan C Cressey opines that we have been taught backwards in many important ways, people can work an entire career without seeing these roadblocks to their achievements, and if you recognise and bust these five myths, you will become far more successful.
For a sweet deal
Negotiation is a discovery process for both sides; better interactions will lead all parties to what they want.
Humanise. Optimise. Digitise
Engaging employees in critical to the survival of an organisation, since the future of business is (still) people.
Beyond the call of duty
A servant leadership model can serve the purpose best when dealing with a distributed workforce.
Workplace courage
Leaders need to build courage in order to enhance their self-reliance and contribution to the team.
Focused on reality
Are you a sales manager or a true sales leader? The difference, David Mattson, CEO, Sandler® and author, Scaling Sales Success: 16 Key Principles For Sales Leaders, maintains, comes down to whether you can see beyond five classic myths that we often tell ourselves about selling.
