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Bryan E. Kuhn
Counselor at Law, P.C.
Business & Employment Law Attorney

Could franchising be headed in a new direction?

When most people think about franchising, they think of the traditional model: a business that uses a recognizable brand name outside of the building to draw people in, and carefully-crafted corporate procedures on the inside to keep customers happy.  

The problem is that it can be difficult for franchisees to make the business their own while under the thumb of the corporate headquarters. (That’s one of the reasons it’s so important to meet with an independent business law attorney before entering a franchising agreement.)

To address this problem and others, an alternative to the traditional franchise method was introduced in a recent article from The Wall Street Journal. The authors posed the idea of quasi-franchising, which essentially takes part of the traditional notion of franchising while still giving the franchisee enough control to make the business their own.

The article gave the example of a “mom and pop” inn that appears to be independently owned and operated but actually uses a franchise-supplied corporate model for the kitchen and cleaning operations. Another example was a restaurant with an independent menu and look that uses a franchiser to handle the books and paperwork.

The authors said that this may be where the future of franchising is heading since there is a huge group of consumers that are shying away from chain hotels, restaurants and retail stores and looking instead to establishments that are independently owned and operated (or at least appear to be independently owned and operated).

What this could mean is that franchisees in the future will have more power to make a business their own, while still enjoying the perks of a behind-the-scenes corporate playbook.  The authors said the quasi-franchising would work best in “niche” business areas “where people are looking for personal touches and standout customer service.”

Currently, the authors said some franchisers are already beginning to head this way by offering a variety of brand names under their control. Someday, the authors said, entrepreneurs may just turn to franchisers for specific issues that they want help with, whether sold as a package or separately.

Source: The Wall Street Journal, “Why the Future Franchise Will Look Nothing Like Today’s,” Andrew Terry and Cary Di Lernia, Jan. 26, 2015

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