With a Flawed Concept, Franchise Failure Takes a Heavy Toll
June 20, 2007 by Sean Kelly
Filed under ISOLD IT, xBuyer Beware
(FranchisePick.Com) When franchising goes bad, it can go really, really bad. Former iSold It franchisees Karen McGinn and Gene Bowen, who operate amitheonlyone.org, tell just how bad in a video interview with AuctionBytes Ina Steiner.
With franchising, success is not assured.
Franchising is one of the most dynamic and innovative business growth strategies ever devised. The idea is powerful in its simplicity: provide would-be business owners with a system that’s already been proven to be successful. They can then concentrate on building, not inventing, their own small businesses. Franchising is intended to provide business owners with the guidance, training, tools, procedures, and marketing they need to effectively compete and build a thriving business. While they give up a degree of freedom, they operate under a brand shared and promoted by their franchisee comrades who are also, as the oft-used marketing slogan says, in business for themselves, but not by themselves.
In many cases - in MOST cases - that’s pretty much how it works. It’s WIN-WIN-WIN. Franchisor companies are able to expand rapidly without having to finance and staff local units. Franchise owners get the benefit of their expertise and shared resources. And consumers get efficient service, greater convenience and predictable pricing from brands they know and trust.
For many individuals and groups, franchising is the best route to business ownership. However, not all franchises are created equal, and extreme due diligence and research should be conducted before investing time and money into a particular franchise. (See articles at FranBest, and Top New Franchises) in our When franchising goes bad, it can go really bad.
What happens when the franchise concept itself doesn’t working?
eBay drop-off store franchises like iSold It, Snappy Auctions, and others were heralded in recent years as having the hot new franchise concept. While there are many exciting new franchises, they are often variations of or improvements on an established model. Totally new concepts are often based on an unsubstantiated premise: that people will drop off stuff at a store for franchisees to sell on eBay, and pay enough to cover eBay fees, franchise fees, operating expenses, etc.
According to Karen McGinn and Gene Bowen in their video interview with AuctionBytes, the financial, emotional and physical consequences of owning a franchise with a fundamentally flawed concept can be severe.
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It is unfortunate that most of the franchises have been marketed utilizing the eBay biz model and not the proven franchise biz results. I have met dozens of franchise owners at eBay events.
The fact is the majority of franchise owners are eBay enthusiasts and not experienced business people. The eBay brick and mortar franchise model just will not pencil.