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Thu 01 Apr 2004
Category : Commentary/franchise.txt
It's the gold rush. It's the time to be your own boss. Or so everyone thinks. There are lots of free seminars one can attend about starting your own business. I attended a couple and I'm hooked - I'm going to sit in on a few more. Partly to clear my own head. But mostly to watch this tide run its course.
Lots of people selling franchises. Great business, if you're the franchisor. Not so, if you're the franchisee. Too many people reading Robert Kiyosaki - and quite a few, I believe, are going to lose their shirts.
The question is : what's the difference between a McDonald's and a child care centre or a computer-aided learning centre, when they're all sold as a franchise?
Franchising is the easy way in. You can create your own business, buy over someone else's, or buy a franchise with all the templates, powerpoint slides, and letters to parents laid out for you. If you spent your whole life scoring A's in exams by memorising "model answers", which route would you take?
But McDonald's have squeezed out almost all dependencies on the human element from their workflows and processes. That's the McDonald's way and it's the archetypical franchisable business. But nobody I know has figured out how to replace the quality a human being brings when it comes to taking care of a child, or motivating kids to learn through the joy of discovery. How much money can these businesses make, when the operators have no idea what it takes to create their products, do not understand the products they would be selling, and have left staffing as an afterthought?
I think the key question to ask is : can the business produce a consistently high-quality product, when operated by any normal human being? In other words, have they found the key to making it work like a well-oiled machine, where a specific role can be performed by any mere mortal? Child care and learning centres are still businesses that ought to be run by people with a love for kids and helping them learn and grow. It's not like a method can't be found to systematise the delivery of these services. Somebody just might be able to find the right idea. But the ones doing the selling last night most definitely didn't. Then what are they selling?
So some businesses will work as a franchise and some won't. The key is to figure out the rules of each game. Of course, anybody can attempt to sell any business as a franchise. But, caveat emptor, let the buyer beware. Because the would-be hunter might just end up as the prey.