Franchise Definition : What is a franchise?
Joel Caws - Technical Director, Select Your Franchise
This is probably the most common question asked in franchising and one I asked myself when I first started working in the industry some 7 years ago. Of course, I had heard the word franchise mentioned in business numerous times but I had never really grasped the concept of what a franchise was or what made it different from any other business.
The likes of McDonalds and Burger King I understood were “franchises” but as far as I was concerned they were simply a chain of fast food restaurants.
Dictionary.com have a fairly good definition of a franchise:-
franchise (noun)
“… the right or license granted by a company to an individual or group to market its products or services in a specific territory…”
Although I prefer a paraphrase which my business partner explained it to me:
“A franchise is essentially the documenting and replication of a proven business formula.”
So quite simply a franchise is proven business formula which can be replicated; a successful business which has documented and packaged its essence, its product or service offering, how it works and how it makes a profit, the stuff which makes it successful and profitable and provides it in a ready-to-go formula that if followed correctly should replicate the end result… success!
Of course there are factors to consider such as location, local market, current market conditions and the dedication of the franchise operator to the system. But all things being equal a franchise operation should in theory experience the same success as the original franchise pilot businesses.
Tags: franchise business, franchise definition, joel caws, what is a franchise
December 8th, 2009 at 9:12 pm
Do you think the business (franchisees) performance will depend on the quality of the franchisors recruitment process as high quality people are needed to market, sell and manage a business.
December 10th, 2009 at 3:09 pm
@crunchers
I do think the recruitment process is critical in terms of franchisees future performance. Obviously theres no guarantees, but by taking the time to assess the suitability of a prospective franchisee and whether they can work with the franchise system in the way it has been designed is going to maximise the chance of success for both franchisor and franchisee.
Business owners take time to assess the suitability of a job applicant and look at how capable they will be in carrying out the tasks required to perform their job. I think even more so should a franchisor take time to assess a potential franchisee as there is so much more at stake.
February 5th, 2010 at 5:05 pm
There seems to be an interesting dynamic between “selling” franchises and “recruiting” franchisees.
When I think about selling a business to someone it’s less about recruitment and more about selling/buying.