Franchises

Migrated. Originally posted June 1, 2009

The whole point of a franchise is to create income on purpose. Meaning that everything about how they operate, are supplied, and run is specifically designed to create a business that is very stable, profitable and has a massive success rate. I think that McDonald’s, the most well known franchise, and the one that I will use to illustrate how they work has something like a 2% failure rate. On average 40 cents of every Dollar spent in the United States is spent through a franchise.

So here’s the deal. Every franchise has 2 components to it. It has a suppor component, and a supply component.

supportsupply

 

The whole point of the support component is to teach the franchisee exactly how to run their business. In the case of McDonald’s whenever someone has the privilege of paying the million plus Dollars it costs to buy one, the owner gets sent to Hamburger University. At Hamburger U, the business owner is taught every aspect of how to run their business. From how to fill a soda, all the way to firing and hiring. They are also given access to a support database, so if they would ever need to look something up or get a question answered, they have a location to go. The whole point of the support system is to aid the business owner in successfully running their business.

Once they know how to run their business, the supply side kicks in. The supply side gives the franchise owner access to a single vendor that will supply them with every product that they will need to run their business. Basically with one phone call the business owner can have his entire restaurant resupplied with everything from napkins to hamburger meat. The support side teaches them everything about when they need to resupply, the amounts and everything like that.

In the franchise realm, the support side is the most important one of the two. The access to a single supplier just makes everything that much more convenient. The reason the support side is most important is because that is the component of the franchise that teaches the Franchisee exactly how to run their business.

The really cool thing, is that an individual can literally do something extremely similar through an internet connection, and some coaching, training, and an affiliate partner to act as the supply side. A personal franchise of sorts. The only real big difference is that these don’t come with a seven figure price tag, or all the other overhead costs associated with running a brick and mortar business. Their supply side (affiliate) partner handles all of the shipping and e-commerce on their website.

I love the internet. It’s not even 15 years old and it’s already changed the entire landscape of business, and allowed individuals to do amazing things for very cheap that used to require insane amounts of capital that it would take to do it 20 years ago.