In A Business Franchise, Who Develops The Product And Business Systems? | Business Operation System
The way I understand it, in a franchise, there is a model location.
An example store.
It's where they developed checklists for everything.
Delivering consistent service. The marketing strategy, etc.
A franchise then sells the rights to operators in different locations.
And copy/pastes their details onto the materials.
The idea is the marketing headquarters serves as a model.
All the testing gets done there. They figure it all out.
Everyone chips into a single marketing budget. By paying the franchise fees.
Delegating the marketing to HQ.
McDonald's, for example, is good at making things run smooth.
They make sure the checklists get followed. The ingredients made.
But if a store owner lack skills in marketing. Or doesn't know about projections, demographic growth, etc. They delegate it to McDonald's headquarters.
The quality of systems depends on the franchise.
The headquarters should develop the original systems. These are the ones a new store launches with.
Then it's a team effort.
If someone is testing something on their store, and it fails.
It's not the headquarters fault.
They're delivering their contractual promises.
But if a satellite office figures out something new.
They should share with headquarters. So everyone benefits.
It's team coordination.
In the beginning, if you're buying a franchise, you are buying those systems,
The marketing materials,
You're buying what works. What's proven and tested.
That is why you hear things like:
"80% of new business fail but 80% of franchises succeed".
I'm sure those numbers are not accurate.
But the concept is real.
Franchises are more successful because they use proven systems.
They found a market-product fit. Figured out the message-market match. They know which medium to use. What pricing. They have been operating the business cash flow positive for a few years.
Now they license the model to everyone else.