Good Franchising

Abstract

Our most recent article was entitled “Bad Franchisors!” and discussed various aspects of the unfortunate behavior of some unscrupulous franchisors.1 But, as we said in that article, nothing written there should be construed to mean that all franchisors are bad or that all franchise opportunities are fraudulent or somehow of questionable quality. Franchises can be profitable business opportunities for systems designed and operated to provide quality goods and services to their customers, franchisees, and other stakeholders. However, franchisees must be prepared to take advantage of all that the franchise systems offer. Before we consider what constitutes a good franchisor, we should define franchising. And we should consider its history briefly. Although there are many “definitions”or explanations about what franchising is, it can be thought of as a marketing and distribution system involving an independent businessperson (i.e., the franchisee) who buys the rights to market the goods and / or services of another entity (i.e., the franchisor) according to the procedures and standards set out by the franchisor in the franchise agreement and referenced ancillary documents through a business operation known as a franchise. The franchisee is essentially paying a fee to the franchisor for replicating the business of the franchisor. At its heart, franchising is not an industry but rather it is a marketing tool, nothing more, nothing less. Good franchisors comprise this tried and proven method of distribution and have seen its growth increase internationally since the Second World War.