Franchising And The Internet

from the two-things-that-might-not-go-well-together dept

Franchising used to be such a great concept. A big parent company builds up the brand, and provides training and some basic look-and-feel stuff, and then allows a local business person to take over to handle all the local stuff. That worked great pre-internet dot com craze. Now, franchises are running into all sorts of problems. The franchisers are looking at selling on the internet, which the franchisees claim is a violation of their franchise agreements. Meanwhile, the franchisees are also looking to sell via the internet, and the franchisers aren’t too keen on that. Now companies are trying to figure out if there’s a way to update the franchise concept for the internet age.

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Comments on “Franchising And The Internet”

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Alternatives says:

Re: Simple Answer

Ed’s got it right. But most people won’t see:

1) If the sale is going to happen, better to get something rather than nothing
2) you don’t have to deal with customer service, fufillment, or collection….and yet you get a check.

Many of the franchise operations make a killing taking product and processing it for the frachisees…they would make MORE of a killing selling it directly (assuming the personal local relationship is not worth anything)

Ryan says:

Re: Re: Simple Answer

I don’t see how local franchises can’t be involved, most companies that are composed of franchises are local and the products they deliver are of that nature too. It just doesn’t make sense for the majority of franchising companies to try to keep all the web business for themselves rather than distributing it.

Ed says:

Re: Re: Simple Answer

Existing agreements aside, a franchise that reserves the right to take away a franchisee’s business with direct web sales won’t find too many willing new franchisees in the future. Besides, offering the franchisee a share of web profits (oxymoron?) is an incentive that can be reflected in higher franchise fees, so in the end it’s probably a wash, but with everything spelled out in the franchise agreement noone should feel cheated.

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