More on Franchising

Franchisors provide varying levels of support and monitoring to their franchisees. In some cases, all franchisee may receive is the name and subsequent recognition that goes with that. In other cases, franchisees are given (and are in many cases required to use) an entire infrastructure of management practices, instruction manuals, marketing materials, and other types of support.

An entrepreneur needs to examine these varying degrees of support carefully. An entrepreneur interested in simply owning a business may prefer to remain on a tight corporate leash--following corporate policy to the letter and maintaining a well-oiled company machine.

On the other other hand, an entrepreneur with a more risky disposition may enjoy the independence that comes with truly owning his or her own business (with the small caveat of having to pay some royalties and use a given name) and the freedom that a loose franchise would provide. Entrepreneurs of this type could try their own hand at branching out, growing (and LEARNING) about running an independent business through these means.

So why would an entrepreneur of the latter sort prefer a franchise to test their business savvy instead of just opening an independent business?

It all goes back to levels of entrepreneurial comfort. Franchises have historically lower failure rates and franchise entrepreneurs (as risky as the may prefer to be in a franchise environment) may still prefer not to risk the failure that is overwhelmingly prevalent in the independent world. Failure rates are lower due in part to experienced and proven marketing/operational approaches by successful and well-known national chains. Mostly, these lower rates are really due to intense screening processes by companies looking open franchises that will have capable management.

Interesting. So what happens if you survive a screening process and a national company deems you capable of owning and operating one of their businesses? Does that make you capable of owning and operating a business of your very own?

Food for thought.