The Ultimate Guide to Responsible Franchising

Chapter 7Assessing the Skills and Viability of a Franchisor

I’ve already stated that every franchisor is in two separate and distinct businesses. Business 1 is their consumer-facing business. They need to possess a mastery-level understanding of bringing their products and services profitably to market. If you shop a franchise, you should experience excellence, meaning the franchise operation delivers more real and perceived value to the customer than it extracts in price. I delve into the common value proposition of franchise brands in a moment.

Business 2 is the business of franchising, which I defined as “recruiting, training, resourcing, developing, and leading a team of entrepreneurs to build a brand.” A national franchise brand is built one neighborhood or trade area at a time. The best predictor of a franchisors’ success (which is worth repeating) is the franchisees’ ROI and quality of the franchisee-franchisor relationships.

For a franchise brand to be viable, a franchisor must demonstrate mastery of both businesses, or eventually the brand will stagnate and decline. When a brand stagnates, franchisees increase risk that no one franchisee can mitigate. There are times when a franchisee can outperform a brand, but generally not for any extended period of time.

The Common Consumer Value Propositions of a Franchise Brand

I’ve identified 14 distinct ways customers perceive value, as explained in each section of this chapter. I am not asserting this is a whole and complete ...