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Franchising is a BEAST of a business model. Everything is about their success. If they don& #39;t succeed, the brand slowly declines. Franchising requires and builds unique leadership muscles and different mindset than typical corporate or product businesses. Some notes here:
Influence over command and control: franchisees are not my employees, they are investors in the brand and business. We have contractual relationships, but if you have to lead by the letter of the legal doc, you are in a very bad place. Focus on commitment over compliance.
Franchising accelerates growth, but over time can slow innovation. It& #39;s a paradox that the best companies in the space know how to navigate - but requires equal parts art and science to drive real change while asking so many small business owners to co-invest for the future.
Incentives are aligned in most franchise business models, but some can be perceived to be at odds. What smoothes that out are strong relationships, regular education around what is needed to compete, and balancing risk vs. reward for experimentation and investing
Franchisees are more often small-medium vs large companies (although there are some very large ones), and those SMBs have their life savings invested - good franchisors remember, respect, and honor that at all times.
Franchising (and models like it) helps entrepreneurial-minded people get into business "for themselves, but not by themselves" and can be a fantastic ecosystem where Mainstreet meets WallStreet - building big brands that are powered by small, local business.
For founders with aspirations to grow with models that are similar to franchising (licensing, JVs, distributed operating partners, etc.), given that others are taking on risks with you, the more you can de-risk and prove out the concept, the more your brand-license is worth.
Similarly, the earlier you want to franchise, the less proven your concept, the more risk you are asking others to take, the less your brand-license is worth (at first). The model needs to have economics that work on all sides AFTER royalties or license fees are paid.
Franchising, licensing, and similar models are a great way to build businesses with good systems, but doing it well requires equal parts art and science. Don& #39;t jump into it without people around you who understand the dynamics.
