A true entrepreneur becomes a franchisee!

Have you ever received the reaction: “Franchising? Uhmm… but then you're not really a true entrepreneur?” There are quite a few misconceptions that cast franchising in a negative light. Result: aspiring franchisees withdraw based on misunderstandings! A bad situation for franchising in the Netherlands. It's high time to address some of these misconceptions.

‘A good entrepreneur doesn't become a franchisee’

Who is actually the better entrepreneur? The owner of a café or of a McDonald’s? Of a hardware store or of a Praxis? The local grocer or an Albert Heijn? You decide. Many franchisees certainly earn significantly more money than the average entrepreneur. Not to mention the success rate. In many sectors, operating without some form of collaboration is almost no longer possible. Good entrepreneurship is all about what you consider it to be. In any case, the level of business results says more about good entrepreneurship than whether or not it is franchising.

‘As a franchisee, you are dependent/as an independent entrepreneur you are independent’

Who hasn't heard: “You're becoming a franchisee? So you can't do it alone?” The answer is: entrepreneurs always need other entrepreneurs. Think of your supplier, your financier, and your accountant. We are simply not alone in the world. Due to technological progress and globalization, these ‘mutual dependencies’ are only increasing. What applies to franchisees applies to all entrepreneurs, only with a different emphasis. Naturally, dependence is greater in franchising, but there is a common interest (revenue, market share, etc.). The dependence is also mutual because franchisor and franchisee need each other. Regardless of any discussion about dependence, it also matters what it yields you ‘at the bottom line’.

‘As a franchisee, you have little influence on your profitability’

In short, a franchisee's business profit is influenced by the formula, location, and the entrepreneur. Franchising itself is certainly not the only thing that determines the level of profitability. Increasing sales or gross margin and controlling indirect costs (such as personnel deployment) are points where the franchisee plays a significant role. To be fair, some costs like rental expenses can be barely influenced. However, you can be sure that a private entrepreneur's rental expenses at a comparable location will certainly not be lower. A franchisee’s influence often goes further than you think, especially when you actively manage points that increase profitability. If the franchisor also provides good management information, a franchisee has a lot of influence on profitability.

‘As a franchisee, you have no say over the policy of the formula’

Every franchise organization has 'rules of the game' (laid out in a franchise agreement and a handbook). These rules should also say something about the franchisees' input in the policy of the formula. It is often stipulated that the franchisor has the final decision. However, translating policy into everyday practice cannot be done without broad support from franchisees. Deliberation in the franchise council and committees, as well as specific tools like satisfaction surveys, prove that there are sufficient ways for franchisees to indeed influence the policy of the formula. It’s like casting your vote in elections. If you, as a franchisee, do not make use of your input opportunities, you actually have no right to speak.

‘Outsourcing tasks negatively affects the entrepreneurship of the franchisee’

Every entrepreneur outsources tasks. You simply cannot be skilled in everything. A good division of tasks between franchisor and franchisee results from a thorough 'make or buy' analysis. The franchisee should be able to save on costs and focus on matters that truly matter in entrepreneurship, like sales! In successful franchise formulas, outsourcing tasks in business operations actually works positively rather than negatively.

‘Uniform guidelines offer too few advantages’

Running a franchise formula involves uniform guidelines. This means performing certain things in the same way. In strong formulas, these are guidelines shown to save costs, ensure quality, or increase effectiveness. Additionally, you can learn more from each other’s successes if you're not just doing things randomly, but can compare the operation of the formula on critical parts with other franchisees. When uniform guidelines offer too few advantages, it’s not a weakness of franchising but a weakness of the respective franchise organization!

How do you determine if franchising is right for you? Here are the main tips:

• Look beyond the term franchising. Focus on how a franchise organization applies it. One organization is not the same as another.
• Form your own judgment about a franchise formula. What suits one person doesn't always suit another.
• There is increasing information available (including checklists) to help you thoroughly orient yourself on franchising or specific formulas. Utilize this!
• Don’t be guided by misconceptions!