Franchisors do not like to take on ‘entrepreneurs’ as franchisees.
Discuss this statement, giving sound reasoning why this statement might be true and countering with arguments against the statement?
Word Count: 1907
Franchisors are increasingly having to be more and more selective in the adoption of franchisees with factors such as economic climate and the potential difficulty with growth playing key factors in the decision making process. It is not simply an ability to grow which creates a successful Franchise and nor is it the desire of any franchisor to adopt every potential franchisee. Franchisors are becoming more and more scrutinising as the global economy declines. There is a general understanding within any franchised
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The same can be said for franchises in need of innovation to survive. With everyday names such as HMV and Woolworths going into administration, amplification of a USP and innovation has become a necessary act for survival. Even the slightest differentiation could mean the difference between consumers buying with you or a competitor; Domino’s Pizza is a good example of this. Since the almost-global economic recession of 2008, survival has been integral to any business model, franchise or otherwise. As a result of this, Domino’s has allowed one of its more entrepreneurial franchisee’s to trial and as a result implemented “Bread Bowl” and “Pasta” dishes onto their menu with great success (Wilson 2012). The same can be said of WSI, an internet marketing franchise, whereby 90% of the products and services have come from the franchisee’s themselves to “ensure that [they] are offering the latest and best internet marketing processes to end clients that deliver results” (McArthur 2012). This shows how, it is not only the economic factors that play to a franchisors’ decision making, but also the type of franchise that they are operating. The online marketplace is a raw marketplace where each business is instantly comparable to their competitors and just as easily undercut; therefore, an innovative franchisee is more desirable than the traditional replicable franchisee as they are able to create differentiation potentially more valuable than price. In addition to this,