"French Fries", "French Size" or "Frenchise"?
The «franchise» business model, based on partnership, is less well-known than one might think. It is also often misunderstood. Sometimes it is viewed as exclusively related to the restaurant industry or strongly associated with France. The author will address these associations and highlight how «franchising» has evolved today.
The proximity to French fries is not only due to the sound: In many restaurant franchise systems, "French Fries" are important components of the menu, the core product or the name - as in the German concept "Pommes Freunde" or the Dutch concept "Mr. Frit". The French association points directly to the origin of the term, as medieval France is considered the "birthplace of franchising". Here, privileges were granted to third parties who were allowed to produce and trade in the interests of the state for a fee.
Franchising has now developed into a globally successful growth and market penetration strategy, with around 12,000 franchise brands worldwide. But the prejudices remain. Because when I ask students, workshop participants or ChatGPT which franchise system comes to mind first, it's "McDonald's". Regardless of the fact that franchising is at home in almost all sectors today.
Franchising - how does it work?
Franchising is a partnership-based growth strategy for companies. To make this possible, the business concept with which expansion is sought is standardized as far as possible. This ensures that the success factors and quality features of the concept can be transferred to the franchisees without loss and can therefore be delegated. Franchisees pay fees for the time-limited rights to use the brand, business concept, products or services, support and marketing and also invest in equipping their business.
From "Mama goes dancing" to "Damn Plastic"?
Franchising can be used universally and across all sectors. The financial commitment varies depending on the strategic objectives, the technology used and the uniqueness of the business concept. "Mama geht tanzen", a start-up founded in 2022 by two young mothers in Wuppertal, Germany, has grown with its event concept through franchising and is already represented throughout the DACH region, the Netherlands and France. If you visit the "Museum of Illusions" in Geneva, it is one of 55 locations of the successful experience museum. The first "Museum of Illusions" was established in Zagreb in 2015 and now offers immersive experiences in 25 countries via franchising. For the "GreenCouchPotatos", as they are affectionately called by the Austrian franchise system "Damn Plastic", there are opportunities to buy sustainable alternative products to plastic variants and generally join this sustainable movement.
Franchising can be adapted in a variety of ways and used for expansion, whether in the skilled trades, education sector, hotel industry, retail, care, non-profit organizations and many more.
Franchising in the age of AI
Artificial intelligence is being used in franchise systems to optimize the range and processes in line with the times. For example, the French system "King Jouet" uses AI to optimize the packaging of its board games. Its aim is to reduce its ecological footprint and manage resources better. The German system "Global Office" uses voicebots and intelligent interface communication to offer optimal 24/7 customer service. A key factor in the success of franchise systems is operational efficiency, both externally and internally. AI tools can not only handle customer support effortlessly, but also many of the day-to-day administrative tasks involved in supporting and training franchisees. The French real estate system "Guy Hoquet" offers employees and franchisees interactive training modules with avatars in order to respond quickly and precisely to their needs. Comprehensive operating manuals can respond optimally to users' questions through the implementation of AI.
People as a success factor
In addition to all the technological features, franchise systems organized as partnerships have the advantage that the success factor "people" plays a decisive role. Franchisees do not simply join a sales community as partners, they are accepted into a "franchise family" of the respective franchise system. The community spirit practiced and moderated by the respective system is of inestimable motivational and communicative value. Creating this interpersonal balance between system-specific rules, AI-driven technological processes and the partners' individual scope for development is increasingly becoming a sustainable success factor for franchisors who think and act sustainably.
Veronika Bellone is the founder and CEO of Bellone Franchise Consulting GmbH and Professor of Marketing at the FHNW School of Business. Together with her partner, she writes specialist and non-fiction books as well as business thrillers on current topics in the franchise business.
"A decisive factor for the success of franchise systems is operational efficiency, both externally and internally."
Special features of the expansion strategy
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Franchisors expand with the financial participation of franchisees.
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Business founders set up their own business with a proven business idea.
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The business concept is constantly evolving through the mutual exchange between franchisors and franchisees.
