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The Isolated Franchisee

by Ed Teixeira

Learn why being an isolated franchisee can put a franchisee at a significant disadvantage.

When a franchisor launches a new franchise program the key priority is to develop the franchise network. This involves prospecting for qualified franchise candidates and if all goes according to plan, consummating the franchise transaction.

Part of the franchise development process is establishing and targeting specific territories or regions. This approach referred to as cluster marketing has a number of advantages which include, building franchise brand recognition easier and faster, as well as better vendor pricing. This allows franchisor resources to be deployed more efficiently and advertising fund contributions can be spent more productively. If you have fragmented franchisees in various territories, it detracts from the aforementioned advantages. For the record, I am a proponent of cluster marketing with a few exceptions.

From a positive standpoint a startup franchise can provide an opportunity to get in on the ground floor of a good franchise opportunity and obtain the territory you want. There are instances where developing franchisees in various markets can work. For example, a multi-unit franchisee that represents a commitment to open multiple locations or a franchise concept that has unique characteristics such that the franchise can be successfully operated without adjoining franchisees. Despite the exceptions, cluster marketing remains the most effective way to develop a franchise network.

 However, for the start-up franchisor it can be difficult to say no to a qualified franchise candidate. This leaves it up to the individual franchisee to decide if they want to face the possibility of becoming an isolated franchisee. A good place to begin is by asking the franchisor what their franchise development strategy is. Their response says a good deal about the competency of the franchisor. Unless the franchisor requires multi-unit franchise owners, a fragmented franchise network can be problematic.

The isolated franchisee can face a number of challenges as a result of being alone in a large geographic area, especially if it is a significant distance from franchisor headquarters.

The challenges include:

· Possibility of slow or poor franchisor support

· Building brand recognition can take much longer

· Negotiating better pricing from vendors can be difficult

· Lose effectiveness of advertising programs

· Obtaining assistance from a neighboring franchisee isn't always available

In essence, having fragmented or isolated franchisees can detract from the effectiveness of the franchisor and franchise program. The main challenge is whether the franchisee has the courage to say no.

2015 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating Officer, FranchiseGrade.com. He is a former franchise executive and franchisee. He can be contacted at 631-246-5782 or at  franchiseknowhow@gmail.com

 

 

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