The Future Of Franchising: Two Evolving Ideas

Two recent articles from Down Under propose some new paths for the evolution of the franchise business model. First is an analysis in the Wall Street Journal from two academics at the University of Sydney Business School. Under the headline “Why the Future Franchise Will Look Nothing Like Today’s.” In it, the authors propose the concept of “quasi-franchising” to combine the benefits of the independent local entrepreneur with back-office operations from a franchisor.

This model, the academics write, “gives franchisees control of the front of the house – the name, the image, the look and feel of the place – and lets them customize it according to their own creativity and the local market. But it leaves the back of the house – the behind-the-scenes tasks in kitchens and offices – to the franchiser. The franchisees, in effect, are paying to slap their own brand over an existing, well-oiled operation.” – Read more at WSJ

Next, Smart Company Australia has a column that suggests that shared technology costs were one of the original benefits of the franchise model, and that the disruption of ever-cheaper technology removes one of the needs for franchising – SmartCompany.

Technology is certainly one advantage that franchisors provide, Entrepreneur agrees, but it offers several other benefits in this article about 5 key questions you should ask about when evaluating a franchise opportunity, including training, ongoing support and competitive advantage – Entrepreneur

Whether you agree with the Smart Company column or not, it offers an interesting historical note for the U.S. policy fight over whether McDonald’s is joint employer responsible for local hiring decisions.

When Ray Kroc was starting McDonald’s and wanted to achieve a consistent brand and product, “He chose a unique path: persuading both franchisees and suppliers to buy into his vision, working not for McDonald’s, but for themselves, together with McDonald’s. He promoted the slogan, ‘In business for yourself, but not by yourself.’ ”

Take note,  National Labor Relations Board.


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