The Future of Franchising

Business professors pen article suggesting that the ideal franchise arrangement is a hybrid of customization and standardization.

January 30, 2015

NEW YORK – According to an article in the Wall Street Journal this week, the next generation of franchises will be a hybrid that’s “part franchise, and part not.”

The article’s authors, both faculty members at Australia’s University of Sydney Business School, call the idea “quasi-franchising.” Under this model, they see businesses such as a neighborhood restaurant with an eclectic menu that advertises itself as an alternative to the big national chains — but whose owner made a deal with a franchiser to locate a site and then handle all of the paperwork to get the place up and running.

Essentially, franchisees would control and customize the front of the house elements of the business (such as the name, the image, look and feel of the place), but leave the back of the house (the behind-the-scenes tasks in kitchens and offices, for example) to the franchiser. The franchisees, in effect, are paying to slap their own brand over an existing, well-oiled operation.

So, the authors ask, why would franchises take this approach when the regular strategy seems to be working so well? Because it represents an opportunity for them to tap into a huge group of consumers who are growing disaffected with franchising as it is today: Millennials, in particular.

Millennials, along with the preceding Gen X consumers, have become weary of the cookie-cutter experience embodied by so many aspects of consumer life and are seeking something more than the templated experience most franchises provide, particularly in niches like bars, boutique hotels, cafes and restaurants.

Meanwhile, say the article’s authors, people who head into franchise ownership with an entrepreneurial dream are getting increasingly frustrated that it’s impossible to put their own stamp on the business. In recent years, more and more owners, across a range of chains, have sought greater autonomy from headquarters.

“Quasi-franchising aims to address these issues. Our approach lets entrepreneurs do what they want most, make a business their own, while letting the corporate bosses do what they do best — handle the behind-the-scenes machinery of the operation that’s so tough for a business owner to build from scratch,” says the WSJ article.

Advertisement
Advertisement
Advertisement