Want a glimpse at where franchising may be heading next?
Imagine a setup that’s part franchise, and part not: it's an idea we call
quasi-franchising.
A Two-Headed
Operation
It’s an idea we call quasi-franchising. Most service chains
operate by replicating a template: The recognizable brand is out front, and a
finely honed operation works in the back. What we propose is splitting those two.
Our method gives franchisees control of the front of the
house—the name, the image, the look and feel of the place—and lets them
customize it according to their own creativity and the local market. But it
leaves the back of the house—the behind-the-scenes tasks in kitchens and
offices—to the franchiser. The franchisees, in effect, are paying to slap their
own brand over an existing, well-oiled operation. It represents an opportunity
for them to tap a huge group of consumers who are growing disaffected with
franchising as usual.
Gen X and Gen Y have become weary of the “McDonaldization”
of so many aspects of consumer life. They’re searching for something more than
the tired old cookie-cutter experience most franchises provide, particularly in
niches like bars, boutique hotels, cafes and restaurants. Meanwhile, people who head into franchise
ownership with an entrepreneurial dream are getting increasingly frustrated
that it’s impossible to put their own stamp on the business.
And these problems will get only more pronounced. Quasi-franchising aims to address these
issues. Our approach lets entrepreneurs do what they want most, make a business
their own, while letting the corporate bosses do what they do best—handle the
behind-the-scenes machinery of the operation that’s so tough for a business
owner to build from scratch.
Levels of Help
The way we see it, franchisees could either buy an entire
package of back-office services from a franchiser, or choose them a la carte,
depending on what they need help with most. For instance, a franchisee might
simply turn to the parent company as a landlord. A franchiser might use its
size and leverage to buy up potential business sites and then rent them to
franchisees, perhaps also offering financing for the venture.
From there, franchisees could pay regular fees for any other
services they need. That might include a deal to have the franchiser purchase
equipment and inventory, once again using its leverage to get a better deal
than the franchisees could get on their own.
The idea of signing up with an outside provider to get
services might sound little different than outsourcing. But quasi-franchising
can be much more comprehensive than that. The owner isn’t just buying discrete
services, but rather an entire way of doing things. A cafe owner who paid a
franchise to handle staffing, for instance, would get workers who were
thoroughly drilled in the company’s coffee-making methods and other workplace
standards (although the cafe itself wouldn’t have the company logo on the
door).
There’s some precedent for this kind of setup. It’s becoming
increasingly common for a franchiser to carry multiple brands in its stable.
So, opening up to multiple quasi-independent operators wouldn’t be that much of
a reach for many chains.
Of course, this arrangement wouldn’t work everywhere. It’s
best designed for niches—like restaurants and hotels—where people are looking
for personal touches and standout customer service.
But we believe the advantages will make it a compelling
approach for franchisers. Not only would they get rent and other fees from
franchisees, they would get the benefit of attracting committed franchisees
with a strong vision who wouldn’t otherwise want to sign on to a traditional
franchise setup. And by cultivating franchisees who create eclectic brands, the
franchisers could reach out to customers who don’t want a standardized service
experience.
Click
here to access the full article on The Wall Street Journal.