Professor Scott Shane argues that franchisors often do not understand when to franchise or even what franchise structure best drives success. It’s not just franchisors. Franchisees are typically unclear too, as they put hundreds of thousands or even millions into a franchise in the hopes that they and the chain will be successful. Shane, professor of entrepreneurial studies at Case Western Reserve University, venture capitalist, franchise consultant, author, and New York Times small business blogger, speaks with Blue MauMau about his book, From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Business.
For the benefit of franchisor executives, leaders of private equity firms who invest in franchising firms and even franchisees, Shane discusses what the academic world knows about economic patterns underlying successful franchising models. Shane illuminates for the practitioner the building blocks of a franchise model and the identification of drivers and value based on economic logic and research.
He begins by discussing the fundamental decision of whether or not to franchise: what businesses franchise well, what don’t, and why. Carry on reading this post.