When you franchise your company, you may lose All Control

Double-edgedSwordThe benefits of switching to a franchised distribution model to franchisors are well-known:

  • lower cost per unit delivered,
  • frees up capital spending,
  • avoids labour laws/costs,
  • a compliant sunk cost-captured labour pool (day labourers?), etc.

But franchising your delivery system can be a double-edged sword: potentially, you lose all capacity to distribute your product in both the short- and long-term.

I’m not talking about any hostile franchisee action here.

Franchisors that too quickly dismantle their key business strategy (ie. the actual physical delivery of product to meet the end customers’ expectations) are leaving themselves extremely vulnerable.

  • This danger is heightened the shorter the production/destruction cycle of the product is.
  • Products with a very short life make a franchisor more vulnerable to delivery disruption because there is very little room for emergency delivery.

A wise franchisor executive should treat franchisees as the true experts they are in their fields: direct customer problem-solvers.

One Response to When you franchise your company, you may lose All Control

  1. jonathan says:

    Yes, that is the big drawback. But the gain is big too. In many cases, franchising is a good startegy to expand.


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