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Wednesday, August 16, 2006

The Advantages of Franchising

According to the 2006 FranData study published in Franchising World magazine, the franchising world is booming!

Here are some highlights:

  • Of the 18 industries covered, 17 saw an increase in the number of new business concepts being franchised.
  • Over the past three years, over 900 new business concepts started franchising their operations.
  • Not surprisingly, the fast food industry offers the most franchised units, followed by retail and service businesses.

Why franchise?

We can learn much about achieving excellence from successful franchises. The appeal of a franchise is rooted in two promises.

First, there a very clear promise to the customer that's reflected in their brand. (Think: Starbucks, JiffyLube, McDonalds.)

Second, there's a promise to the franchise owner of a well-considered and proven business model that delivers on the customer promise.

The result is two-fold.

  1. It delivers something of excellence to the customer (Starbucks - a steaming hot, fresh brewed cup of coffee; JiffyLube - quick oil changes)
  2. It also delivers something of excellence to the franchise owner (a predictable return on investment, established business procedures, training, staffing plans, physical location layouts, marketing strategies and interested prospects)

BOTTOMLINE: The point isn't that all businesses should be franchised; the point is that all businesses would benefit from taking the same holistic approach to excellence that franchises take. Franchised businesses recognize that there are really two products - the product or service that the customer buys, and the business which the investor buys.

A goal of Six Disciplines is to help business leaders work on their business so they can be as satisfied with their businesses - as their customers are with their products or services.

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