The Same, but Different

The End of Franchising as We Know It?

Why does this customization seem to be happening so much now, as with the McDonald's New Tastes menu?

I'm not sure it is happening so much more. You tend to see more publicity about things when a large company is involved. I'm not sure there's a huge trend in that direction, but it's true Americans have become more sophisticated and may not be completely satisfied with an utterly uniform set of offerings everywhere. This is not unique, by the way, to franchised retail products or services. If you go out and look at, for example, some of the microbrewery operations, you'll find what appear to be local, very-small-production-run specialty beers. Actually, many are owned by one of the largest breweries, but [the companies] realize people want to patronize what appears to be a local operation. This is not unique to franchising-I see this as part of a larger movement in our society, a desire not to be viewed as simply part of a faceless crowd.

If people aren't looking for that uniformity anymore, could that hurt franchising?

If it gets to the point where everything can be compromised, then there's very little reason to have a franchise any longer. One of the benefits of franchising, after all, is the capacity to create a system that can be replicated without having to be reinvented location by location. If it goes beyond a certain point, if it cuts to the core of the system, that absolutely can be harmful.

Is that a possibility, or is it the worst-case scenario?

I haven't seen it happening yet. I don't really think it would happen with a strong system. It would only happen with a system that's not sure of its own identity, or one that's prepared to cut corners or yield to demands too readily.

What can franchisors and franchisees do to make sure this customization doesn't harm their systems or their stores?

Talk to each other more, do less issuing from the top without participation from below. At the same time, franchisors should resist cutting deals independently [with franchisees], one at a time, without adequate recognition of what impact it can have on the overall system.

Is a franchisee really an entrepreneur?

Technically, franchisees are indeed entrepreneurs-they own and operate their own businesses and inherit the resulting responsibility (i.e., they pay taxes). But the quintessential question of entrepreneurship goes deeper than just the legal rights of property ownership. Do franchisees meet the actual definition of entrepreneurship?

Many franchising insiders agree that the ideal franchisee isn't particularly entrepreneurial. A franchise usually works best when people follow a proven system. An entrepreneur, meanwhile, is somewhat of a risk-taker.

Nonetheless, most franchisors think they want entrepreneurial franchisees.until they get them. Then they realize they don't need franchisees to develop logos or recipes. They just need people who work hard.

On the other hand, the terrain varies depending on the business the franchise is in. While fast food may not be the place for entrepreneurial types, service businesses, like personal services or real estate, are another story. In those cases, where success depends on being a good salesperson, an entrepreneurial personality makes for a more successful franchisee.

Another factor to consider: The less known a franchise is, the more important it is for its franchisees to have entrepreneurial personalities. Indeed, some experts argue that the most entrepreneurial types in franchising are those who develop territories for a franchisor. They don't develop the systems and the policy manuals, but they make the company grow. People like Ray Kroc or Colonel Sanders pounded the pavement signing on franchisees and making sure the franchise's name became well-known.

Ultimately, franchising succeeds not so much due to entrepreneurship as to partnership. Franchisors are attracted to exceptionally motivated owner-operators. Franchisees, in turn, enjoy otherwise unobtainable built-in support services: advertising, research and development, and procurement of supplies and other services.

To thrive in this partnership, you must embrace the franchisor's whole concept, system and philosophy. If you want to do your own thing, you'd better think twice about buying a franchise.

Of course, that's not to say you lose your distinctness the moment you sign on to become a franchisee. Even when a franchise is recognized as first-rate (McDonald's, for example), there is often a huge variation in franchisee performance. The bottom line, therefore, is obvious: The individual franchisee makes a big difference.

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