What is Franchising?

Dec 4, 2020. Harry Welby-Cooke

There is a lot of information out there on franchising; yet most people still don’t really know what it’s all about.

There are great examples, sadly some horror stories, well-known facts, reputable brands, fly-by-nights, perceptions, assumptions and it’s all enough to get one quite confused.

For me it’s probably best explained in the words of Ray Kroc, of McDonald's fame:

“Franchising is being in business for yourself but not by yourself”

Franchising, as a political activity, originated in the Middle Ages where feudal lords sold the rights to others for the collection of their taxes and the rights to operate markets. As a business activity, early remnants can be found from the 1840s where a German beer brewer sold the rights to sell their beer in local taverns.

The more modern approach however actually started with the Singer Sewing Machine Company in the United States of America and was quickly outgrown by the likes of the Coca-Cola Company. Today brands like McDonald's, KFC, Pizza Hut, Starbucks, Nandos and a multitude of others have since taken over. These brands have also aided the common misperception that franchising is largely restaurant, and even fast-food, based. Whilst they play a big part, most retail fuel operates on a franchised basis as well as everything else from car dealerships, automotive service and repair, property sales, personal services and even business coaching.

Whilst there are many reasons to partner with a reputable franchise, I’m going to highlight the 5 that make the most sense for me. I too am effectively a franchisee of the global ActionCOACH business whilst also being one of the franchisors for the brand locally. These 5 areas formed part of my decision to go the franchising route in 2007 and have become even more critical ever since:

1.     One-man band issues 

There’s a certain sense of comfort when dealing with a bigger and/or broader brand. As if there is instant trust. It’s so much easier to get your foot in the door. There’s less risk for the customer and they know that there is a back-up if anything doesn’t quite go accordingly to plan. As a franchisee, I’ve got the backing and endorsement of my ‘big brother’. I’m not going to war alone and I have an army behind me.

2.     Speed to market

If I had to design everything myself, to create and develop everything from scratch, it would cost me a fortune in both time and money. Worse than the extra money I would have to invest it would be the opportunity cost of the lost time that would have the biggest impact. With a franchise, one can launch immediately and start earning from day one. On my own I would need months, sometimes years, to develop even close to the same thing and end up earning nothing during that time.

3.     Been there, done that, got the T-shirt

Someone, in fact many people, have been there before and I get to learn from their many mistakes. Instead of paying school fees and having unnecessary setbacks, I get the collective knowledge of decades or even centuries of shared experience. That ensures I start off better, learn faster, bounce back quicker and ultimately succeed quicker. As long as I learn from the historical errors, and do my part, I’m almost guaranteed success. Whilst I did say almost that’s still very comforting. 

4.     A security blanket

When one does have that ‘Houston we have a problem’ moment there are countless people to call on for support and guidance. In franchising, I have the flexibility and ability to control my destiny but also the benefit of a network of professionals who’ve got my back. Whether proactive or reactive there is always someone to turn to who knows better and can get me through. Sometimes that may be in a comforting and nurturing way whilst at other times it may require a more harsh and forceful approach. Either way, I know I’m not alone and can therefore sleep a lot easier at night.

5.     Like-minded people on a mission

Most franchises, and in fact all the good ones, attract like-minded people who are making a positive impact in the world. They generally have a bigger sense of purpose and a calling to leave a legacy. I like that. I’m wired to want to make a difference and definitely want to be part of a team that’s on a mission. Our global ActionCOACH vision of ‘World Abundance through Business Re-Education’ really speaks to me. Loudly! 

Our own local ActionCOACH vision of ‘Thriving Businesses, Impacting Economies, Transforming Communities’ gets me up in the morning. I’m grateful every day to work with such amazing people, all of whom, are on this great journey together. Wow! 

I truly believe franchising is an amazing business model and has done so much good across the world. For me, it’s a no-brainer. Hopefully, this has at least provided some clarity and helped you in some way.

For more information please watch my videos on franchising on our ActionCOACH YouTube channel. Remember to subscribe while you’re there.

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