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It doesn't. It just makes it not your problem, that's all.

by girvo 11y ago

chii 11y ago
so the franchise model is basically just another name for outsourcing your marketing?
- thaumasiotes 11y ago
  I thought the point of the franchise model was that your franchisees, instead of you, keep any surplus money that they generate, giving them much stronger incentives to succeed under your brand. Compare: 1. Local outpost of a chain store that doesn't franchise. The manager, like everyone under him, is paid a salary, and whatever money is left over after paying the store expenses goes back to corporate. This model is illustrated by a scene from The Sopranos (here: https://www.youtube.com/watch?v=Oz0uEzRSWXw https://www.youtube.com/watch?v=Oz0uEzRSWXw ) in which the manager of a Starbucks has to break it to the mafia that he can't pay protection money because he doesn't have any discretionary funding. 2. Local franchise. The owner has no salary. Instead, he keeps whatever money is left over after paying the store expenses. This is likely to have several different benefits: the owner may feel like putting in extra time at his store. If the janitor has an emergency, maybe the McDonald's owner will clean the bathrooms himself. Similarly, the owner may take a different view toward cashiers dipping into the till than a salaried manager would. And the owner's pricing decisions are much more informed, and therefore more likely to be correct, than the pricing decisions corporate would make. So with the distinction I describe, scaling your brand as a franchise rather than a chain boils down to one difference: in a chain your store operators are salaried and you keep all the extra money, whereas in a franchise you are salaried and your store operators keep the extra money (you might take a percentage, or a flat fee up front, or some combination. I don't know). Paying your store operators that much more under the franchise model means you can expect them to do more difficult and demanding work. It's not all about marketing.

It doesn't. It just makes it not your problem, that's all.

by girvo 11y ago

It doesn't. It just makes it not your problem, that's all.

chii 11y ago

so the franchise model is basically just another name for outsourcing your marketing?

thaumasiotes 11y ago
I thought the point of the franchise model was that your franchisees, instead of you, keep any surplus money that they generate, giving them much stronger incentives to succeed under your brand. Compare: 1. Local outpost of a chain store that doesn't franchise. The manager, like everyone under him, is paid a salary, and whatever money is left over after paying the store expenses goes back to corporate. This model is illustrated by a scene from The Sopranos (here: https://www.youtube.com/watch?v=Oz0uEzRSWXw https://www.youtube.com/watch?v=Oz0uEzRSWXw ) in which the manager of a Starbucks has to break it to the mafia that he can't pay protection money because he doesn't have any discretionary funding. 2. Local franchise. The owner has no salary. Instead, he keeps whatever money is left over after paying the store expenses. This is likely to have several different benefits: the owner may feel like putting in extra time at his store. If the janitor has an emergency, maybe the McDonald's owner will clean the bathrooms himself. Similarly, the owner may take a different view toward cashiers dipping into the till than a salaried manager would. And the owner's pricing decisions are much more informed, and therefore more likely to be correct, than the pricing decisions corporate would make. So with the distinction I describe, scaling your brand as a franchise rather than a chain boils down to one difference: in a chain your store operators are salaried and you keep all the extra money, whereas in a franchise you are salaried and your store operators keep the extra money (you might take a percentage, or a flat fee up front, or some combination. I don't know). Paying your store operators that much more under the franchise model means you can expect them to do more difficult and demanding work. It's not all about marketing.