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And yet people choose to buy franchises rather than start their own independent shops. Proliferation of franchises indicates that this is mutually beneficial.

And yet people choose to buy franchises rather than start their own independent shops. Proliferation of franchises indicates that this is mutually beneficial. Also, bear in mind that the franchise's corporate brand reputationsuffers when a franchise fails, so there's inherently some risk sharing.

allovernow 7y ago
Not commenting on franchising, but I'd point out that, for example, loan sharks are "mutually beneficial" and exist across societies, but they can still be quite predatory.
- codegeek 7y ago
  It is a bit unfair to compare loan sharks to business models liek franchises. Loan sharks can lend you money for anything even if you want to go spend it on something useless that doesn't create any value. Starting a Franchise business creates value even if it may not be highly profitable for someone. I wouldn't call Franchise model predatory even though I am personally not a fan of it because I like complete freedom in starting/running a business. Personally, I wouldn't do franchise (I am too much of a free bird to be caged) but calling it predatory is too much.
- dr_dshiv 7y ago
  Loan sharks appeal to the desperate. If you are in a pickle, you NEED a loan, you don't NEED to start a franchise.
pbhjpbhj 7y ago
>people choose to buy franchises rather than start their own independent shops // [Agreeing] There are massive costs (relatively speaking) for an independent involved in just learning/optimising the supply chain. With a franchise you, presumably, can skip this which gives a huge head start. Also if it's a brand chain then you have the benefit of brand level advertising (which works at a different psychological level to shop/activity/product advertising) which should be more efficient per "lead".
sixtypoundhound 7y ago
Sure - and franchises are actively marketed, by a commission sales force and any number of people who get a 'finders fee' should you happen to sign up through their channel. There is an active push to herd people into franchises. They tend to target unemployed middle-aged managers, since that audience is often driven by ego to "be the boss" and has the disposable funds to pony up a large setup fee. I was aggressively targeted when I was laid off last year. What they didn't know - until we got on the phone - is I'm the target prospect from hell. I certainly have the funds; however, I got them via two decades of finance and strategy work. Old habits die hard. Due Diligence? Don't mind if I do... I was polite but I laid out my expectations in financial terms based on investments in businesses of similar size. Actual deals which I had managed. Made it clear I had the funds to deliver if they could meet my goals in writing. They ran like hell.
- charmides 7y ago
  What did you end up doing instead?
  - sixtypoundhound 7y ago
    When the axe finally fell, My boss walked my resume over to a sister company in the same private equity group. Had an offer within a few weeks. He gets maximum internet good guy points. However, in the meantime, I wound up speaking with a diverse assortment of scum, villainy, and ineptitude. https://resumeskills.us/talent/shortage https://resumeskills.us/talent/shortage

allovernow 7y ago

Not commenting on franchising, but I'd point out that, for example, loan sharks are "mutually beneficial" and exist across societies, but they can still be quite predatory.

codegeek 7y ago
It is a bit unfair to compare loan sharks to business models liek franchises. Loan sharks can lend you money for anything even if you want to go spend it on something useless that doesn't create any value. Starting a Franchise business creates value even if it may not be highly profitable for someone. I wouldn't call Franchise model predatory even though I am personally not a fan of it because I like complete freedom in starting/running a business. Personally, I wouldn't do franchise (I am too much of a free bird to be caged) but calling it predatory is too much.
dr_dshiv 7y ago
Loan sharks appeal to the desperate. If you are in a pickle, you NEED a loan, you don't NEED to start a franchise.

pbhjpbhj 7y ago

>people choose to buy franchises rather than start their own independent shops // [Agreeing] There are massive costs (relatively speaking) for an independent involved in just learning/optimising the supply chain. With a franchise you, presumably, can skip this which gives a huge head start. Also if it's a brand chain then you have the benefit of brand level advertising (which works at a different psychological level to shop/activity/product advertising) which should be more efficient per "lead".

sixtypoundhound 7y ago

Sure - and franchises are actively marketed, by a commission sales force and any number of people who get a 'finders fee' should you happen to sign up through their channel. There is an active push to herd people into franchises. They tend to target unemployed middle-aged managers, since that audience is often driven by ego to "be the boss" and has the disposable funds to pony up a large setup fee. I was aggressively targeted when I was laid off last year. What they didn't know - until we got on the phone - is I'm the target prospect from hell. I certainly have the funds; however, I got them via two decades of finance and strategy work. Old habits die hard. Due Diligence? Don't mind if I do... I was polite but I laid out my expectations in financial terms based on investments in businesses of similar size. Actual deals which I had managed. Made it clear I had the funds to deliver if they could meet my goals in writing. They ran like hell.

charmides 7y ago
What did you end up doing instead?
- sixtypoundhound 7y ago
  When the axe finally fell, My boss walked my resume over to a sister company in the same private equity group. Had an offer within a few weeks. He gets maximum internet good guy points. However, in the meantime, I wound up speaking with a diverse assortment of scum, villainy, and ineptitude. https://resumeskills.us/talent/shortage https://resumeskills.us/talent/shortage