Businesses may soon land in between franchisees and franchisors

For the past century or so, American business – and the restaurant industry in particular – has been heavily dependent on the franchise model. This model is so familiar that it is easy to forget that corporate giants like McDonalds and Walmart were once “mom and pop” enterprises.

Franchising offers many benefits to franchisors and franchisees. But consumer tastes are changing, and many Americans no longer want to have the exact same dining or shopping experience regardless of where they go. Instead, they want “local” and “niche.” This doesn’t mean that franchising is going away, but it may look very different in the near future.

A recent article in the Wall Street Journal discusses a concept called “quasi-franchising.” It is similar to the trend of partial outsourcing that many businesses already rely on. An office complex might contract an outside company to handle cafeteria and food operations rather than hiring and training its own kitchen staff.

Quasi-franchising would take the outsourcing relationship even further. Let’s say that someone wants to open a bed and breakfast or a small, quaint hotel. Rather than handling food and cleaning services, however, the owner might franchise with a national hotel chain.

This bed-and-breakfast is attractive to consumers because it offers a very different feel from the large, multi-story hotels of national chains. And the owners are able to run the business without having to worry about the behind-the-scenes work of food service and cleaning services. Quasi-franchising offers the efficiency and resources of an already established operation without obvious branding that might be a turnoff to customers.

Quasi-franchising may soon be the norm, which means that old models of franchisor-franchisee relationships will need to be modified. If you are looking to become a franchisee, a franchisor or something in between, you may greatly benefit from the help of an experienced business law attorney who is up to date on industry trends and compliance matters.

Source: The Wall Street Journal, “Why the Future Franchise Will Look Nothing Like Today’s,” Andrew Terry and Cary Di Lernia, Jan. 26, 2015

Tags: Business Formation & Planning

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