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New Franchise Idea: Fewer Rules, More Difference |
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Excerpts from Raymund Flandez’s article on the Wall Street Journal Online, September 18, 2007.
A new crop of franchisors are taking a very different approach from the cookie cutter and they are giving their franchisees some freedom to run their own operations much like an independent small business, from personalizing store names and menus to fiddling with prices.
Part of the strategy is to give franchisees the flexibility to compete against independent businesses. However, many franchisors turn to this new approach in order to attract franchisees, who have a growing number of businesses to select from. More than 900 concepts have begun franchising since 2003, according to the International Franchise Association and there are nearly 800,000 franchised businesses in more than 80 industries nationwide.
Of course, this un-franchise strategy has its risks. Greater flexibility may jeopardize service and quality, and personalization can dilute brand recognition. According the chief executive of Findlay Group, a franchise developer, “… if you give people a lot of latitude … you lose branding and, in my opinion, you lose value.”
On the other hand, some franchisors adopt the new strategy. Great Harvest Bread Co. has recently trademarked the term “freedom franchising” to describe the culture in which that best ideas for running a the business come from the bottom up, not form the top down. Except from wheat supplies, franchise fees and territorial rights “we encourage bakeries to make decisions on a local basis that works for them”, says the president and CEO of the company. According to a franchisee, “there are great resources and a collective knowledge to draw upon, but you … are not required to do any of it.”
Finally, Beef O’Brady’s inc. considers pricing freedom as vital since franchisees know the local market better. However, their president also acknowledges that as they grow, they need to create a clear brand for their customers. Right now, some customers do not realize it is a chain.
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