Franchising: Educating The Masses

It’s easy to get trapped in your own space when you wake up every morning concentrating on your set of business problems and opportunities. My space happens to be restaurants (40 years) and specifically, Golden Corral (20 of those years).

One of the things I love about being involved with the International Franchise Association is the exposure I get to the different kinds of businesses that use the franchising business model.

At the IFA convention in San Antonio, I made a point if talking to as many people as I could who were involved in different kinds of businesses and how franchising came to make sense for them.

The diversity of franchise businesses is mind boggling. Businesses in education, from drivers education to math to rock and roll music; businesses in physical fitness, from boxing to fitness centers to gymnastics; businesses in medicine, from research to testing to medical waste disposal; businesses in personal care, from child care to senior care; service businesses, from commercial filter cleaning to chimney sweeping to floor care; automotive businesses, from car washes to car painting; the list of categories goes on and on, and the types of franchises never seems to end. Add in restaurants and the model represents an amazing 4% of the total US economy.

So, to me, the most surprising thing about a business model this successful is how few people understand it.

The IFA recently conducted research asking consumers of all shapes and sizes about franchising and what they understand about it. In a word, the result was shocking. Most had a vague idea that there was a relationship between a brand and a person who ran the business but that’s about where it ended. Many thought that the profits of a franchisee were shared with the franchisor. There was an incredible lack of understanding that the business was local and the franchisee was an entrepreneur who had his or her money invested and who hired their own employees.

It gets worse. Many of the employees who work for franchisees think they work for the franchisor. As far as they are concerned the brand on their uniform or on the building they work in or on their paycheck is who they work for.

This lack of understanding of the franchise model extends to public figures; your state and federal congressmen and senators frequently don’t understand it either. That’s one way that bad franchise legislation sometimes gains traction in state legislatures.

It’s also one way that unions and the National Labor Relations Board and government regulators, all with their own agendas, can exploit the model. If the general public believes that franchising is just another way for large companies to grow and take local profits out of the community, it’s likely they will be ambivalent about harmful regulations or a $15.00 minimum wage.

What can you do? Start small. Talk to friends and business associates about franchising and how it works. If you are a franchisee, let them know it’s your money and the profits stay local to reinvest and grow and hire more people. Make it clear that an attack on franchising is an attack on you and your employees. Make sure your employees know who they work for; they can be great ambassadors for the local nature of the business. Make sure your customers know who owns the business; they want to know that the business is locally owned and it’s not just a big corporation.

There are 700,000 franchisees in the US. If everyone begins to educate those around them we will make a serious dent in the problem. Let’s get started.