The evolution of franchising is a topic that has been often tossed around in conversation for many years, and Professor Andrew Terry has entered the debate.
In his co-authored article ‘Why the future franchise will look nothing like today’s’, in The Wall Street Journal, he and Cary Di Lernia argue ‘Quasi-Franchising’ is where franchising is heading.
Offered as a fix-all solution to current and emerging franchising challenges the model would allow franchisees to be relatively independent, while still benefiting from being part of a network.
The proposed model would:
- Split front-of-house functions from back-of-house functions,
- Give franchisees control of front-of-house, and
- Retain the franchiser to provide back-of-house functions.
Next gen franchising or new (unrelated) business model?
Although the quasi-franchising approach sounds appealing to some, the question stands, are we changing the way franchising is done or are we merely introducing a different business model altogether?
In my view, it’s the latter.
The Terry-Di Lernia model is different to franchising and as such should not infer by its name that it is a form of franchising.
Franchising involves operating under the same trademark or brand.
Quasi-franchising uses a service provider model, for franchisees who would all have their own branding.
That is not franchising, at least not how it is outlined in legislation and case law of several mature franchise sectors globally.
A franchise is a living organism, much like a plant. It is a modular construction comprising a complex set of co-dependent interactions by the front-end and the back-end. Front-of-house (brand image, brand name etc.) is like the foliage of plant that enables photosynthesis. It is what we see, what we appreciate, and what attracts us.
Much the same way the photosynthesis enables the plant to survive, the brand image influences and powers the way business process and business procurement are structured and delivered and is that which attracts customers to a business. It feeds the service proposition, shapes the value proposition and influences the service delivery protocol.
Another way of looking at it is giving franchisees the rights to self-brand would be like putting a Mercedes engine in a Holden chassis with a Toyota badge… it just isn’t right!
Can you imagine how Ray Kroc would react by someone hanging something other than the golden arches outside one of his restaurants?
In support of the quasi-franchising model, Terry and Di Lernia argue brands are “running of juice” –that may be true for a range of brands.
This does not indicate though that the franchising model is broken; those brands just need to reinvigorate their franchisees.
This doesn’t mean a retirement of common branding, but a reinvention that allows the emotional juice to flow in a more flexible offering, customised to the local market, using systems and technology of the franchisor to deliver target-market specific experiences.
The survival of franchising and front-of-house standardisation is not the issue going forward.
What is needed is the intelligent application of franchising principles to the adaptation of e-commerce, changes in customer choice and preference, and procurement opportunities, by developing convergent models.
The franchising business model is still relevant and effective, however that’s not to say new business models can’t also be effective.
Quasi-franchising is an idea for a new business model, and has its merit. However, it has no relationship with franchising.
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