5 Surprising Insights About the Franchise Industry that Changed My Perspective
The franchise industry is full of unexpected revelations that can reshape one's understanding. This article delves into five surprising insights that challenge common perceptions about franchising. Drawing from expert knowledge and research, these findings offer a fresh perspective on crucial aspects of the franchise world.
- Owner Validation Crucial in Franchise Discovery
- Franchisors Lack Alternative Dispute Resolution Knowledge
- Franchise Ownership Limits Entrepreneurial Freedom
- Extensive Franchisor Support Surprises Researchers
- Relationships Trump Systems in Franchise Success
Owner Validation Crucial in Franchise Discovery
Once I fully understood the franchise discovery process, I was surprised at how vital the owner validation stage was. Speaking to those who had made the choice you were currently considering and hearing whether they felt their choice was correct and delivering upon their goals is mandatory to understand the realities of the model. Not only do the positive conversations assist and validate the franchise, but those that were not doing as well could also shed light on nuances (particularly when they may not be following the model as recommended). A balance of perspectives requires multiple calls. When I first investigated a franchise before becoming a consultant, I admit I did not take advantage of that phase of the process and learned from that mistake. Now I stress to my clients how important it is to talk to those living their choice and realizing the results (positive or negative).
Franchisors Lack Alternative Dispute Resolution Knowledge
I have been involved in the franchise industry for more than fifty years: 40 years as a franchise lawyer, 15 years as a franchise dispute mediator and arbitrator, as well as a franchise business operations consultant, expert witness, and member of franchisor advisory boards. What has surprised me most during these years is how little most franchisors and their advisors know about alternative dispute resolution.
The numbers are clearly against franchisors: with often hundreds of franchisees, and only one franchisor, there is a strong possibility of a dispute at some time with a franchisee or a group of franchisees. Yet franchisors and their advisors are often not prepared on how to deal with a dispute at an early stage and possibly before litigation. Even worse, their agreements do not deal with the possibility of a dispute and include provisions on how these disputes will be handled.
There are many ways in which a franchisor can require the parties to meet, to use an ombudsperson, to have a dedicated member of senior management to consider franchisee concerns, or to require mediation and/or arbitration. With mediation and arbitration, the dispute procedure can be set before the dispute arises and many of the procedural and legal requirements, including how the hearing will proceed, can be established. Most importantly, the parties can agree on what experience in franchising the mediator or arbitrator must have, and what limitations there may be for an appeal from an arbitration award.
I write and speak at and for many programs to educate franchisors and their advisors to become aware of alternative dispute resolution and to ensure that their agreements are well drafted and detailed to outline various steps and procedures to attempt to resolve disputes early, efficiently, and with a minimum of disruption.
Franchise Ownership Limits Entrepreneurial Freedom
What caught me off guard was how many franchisees buy in thinking they're buying freedom but end up stuck in a stricter system than a 9-to-5. The structure can be suffocating. You get brand recognition, sure, but you also get rigid rules, high fees, and limited autonomy.
That flipped my thinking. I used to see franchising as a shortcut to entrepreneurship. Now I view it more like renting a business model. You pay for the playbook but don't get to change the plays.
This shift made me value independent ownership more. It's messier, riskier, but it's yours. In SEO too, cookie-cutter strategies don't cut it. You need space to adapt, test, and break things.
Franchises teach consistency. But growth? That comes from experimentation. And freedom, I've learned, doesn't always come with a manual.
Extensive Franchisor Support Surprises Researchers
What surprised me the most during my research into the franchise industry was how much support franchisors provide to ensure the success of their franchisees. I initially thought owning a franchise would be more about autonomy, but I learned that there's a lot of structure in place, from marketing support to training programs and ongoing business consulting. This support system was much more extensive than I expected. It shifted my perspective significantly—I had always seen franchising as a "plug-and-play" business model, but I now see it as a partnership where success depends not only on the franchisee's effort but also on the franchisor's investment in their growth. This newfound knowledge made me more open to considering franchises as a viable option for future business ventures, knowing that it's a collaborative effort with a proven blueprint for success.
Relationships Trump Systems in Franchise Success
What surprised me most about the franchise industry was how much of it is about relationships, not systems. I went in thinking franchising was all about replicable models, strict guidelines, and brand consistency—and while that's true, I didn't expect to find so much emphasis on human connection. The most successful franchises I studied didn't just have a great product; they had deep trust between franchisor and franchisee.
This changed my view of the business model. I started to see franchising as less of a mechanical expansion strategy and more of a partnership. That shift in perspective made me realize soft skills—communication, mentorship, adaptability—are just as important as business acumen. It made me appreciate the value of culture and support systems in scaling success.
