The WSJ had a story yesterday on a new movement: "Freedom Franchising." Apparently competition for good franchisees has become so intense in the past few years (with more than 900 franchise concepts rolled out since 2003) that some chains are taking a new tack: giving their franchisees more leeway to run their operations as they see fit. Great Harvest Bread Company, for instance, is allowing franchisees to decide what items to put on the menu and where to buy supplies, instead of restricting their menus or the suppliers they have to use. I'm going to assume, though, that all Great Harvest franchisees still have to sell bread. (Great Harvest has also, BTW, trademarked the term "Freedom Franchising").
I was intrigued by the article and premise, especially after teaching the Krispy Kreme case study from the Smith & Williams casebook, but I still wonder how a franchise can succeed if its stores aren't (pretty) uniform. The article also quotes the head of the Beef O'Brady chain of sports bars. The chain has been giving its franchisees freedom to set prices, but "[a]s we grow," he said, "we do feel that we need to be tighter and do more streamlining...to create a clear brand for our guests so that they know what to expect." Isn't a "clear brand" and uniformity the whole point of a franchise?
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1. Posted by Gordon Smith on September 19, 2007 @ 22:48 | Permalink
Harwell, This is an interesting story, and I am happy you blogged about it. The short answer to your question is "yes." The more nuanced answer is that "freedom franchising" isn't entirely new, but all franchises have to make decisions that trade off control/branding against incentives/innovations. So think of this as mostly a matter of degree.
2. Posted by Harwell Wells on September 20, 2007 @ 6:33 | Permalink
Gordon, the question was partly rhetorical; one fun thing about teaching Krispy Kreme is getting the students to grasp that franchising is about striking a balance between control and independence, and I also like to make the point that franchising may be particularly popular in America because it is a way of reconciling the reality of large business organizations with the American dream of "being your own boss." There is, incidentally, a nice short discussion of franchising in Thomas McCraw's history American Business, 1920-2000, where he points out that some of McDonald's best-known products, including the Big Mac and Egg McMuffin, were first suggested by franchisees.
3. Posted by Franchise business in the Philippines on September 21, 2011 @ 6:31 | Permalink
Franchising your business is a proven route to rapid growth. But becoming a franchisor is not an automatic ticket to success, especially in this challenging economy.Will certainly visit your site more often now.
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