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Net Rewards

No Boundaries

Perhaps the greatest advantage of the Internet is it connects people from virtually all corners of the world. Experts agree the most significant impact of the Internet on franchising to date could be the tremendous power it's given franchisors to expand globally. By establishing Web sites, franchise companies can easily market and sell their products and services abroad and tap into an international pool of potential franchisees.

When The Tinderbox launched its Web site last August, it received dozens of inquiries from interested entrepreneurs in Western Europe and surrounding countries.

"On the Internet, we've become global overnight," says Fred Haas, director of franchise development at The Tinderbox in Bala Cynwyd, Pennsylvania.

Likewise, franchisees can reach national and even international customers by establishing their own Web sites. Industry watchers, however, see this as a potential for conflict.

"In addition to the territory in which they operate their stores, franchisees can now become global," explains Haskell. "While that means more revenues, more royalties and more products distributed, a lot of franchisors limit your territory. Right now, there's no language in the franchise agreement that says you can't market globally through the Internet. [The technology is] too new. So if a lot of orders come out of [another franchisee's] backyard, well, that could present a lot of problems."

Even so, many franchisors still allow franchisees to establish their own Web sites. For a small fee, for example, Molly Maid will create home pages for its franchisees. And more than 60 Tinderbox franchisees have Web sites (although all content must first be cleared through the franchisor). Neither franchisor says they have experienced any territory disputes between franchisees.

"So far, there really haven't been any problems," says Haas. "Each franchisee understands that territory boundaries are lifted [through the Internet], and they're marketing abroad to various foreign countries."

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This article was originally published in the March 1997 print edition of Entrepreneur with the headline: Net Rewards.

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