FIP 50: Social Franchising Series 3/4: What Everyone’s getting Wrong about Social Franchising, with Ben Litalien

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We’re going deep into the commercial side of franchising in this episode with Ben Litalien, seasoned franchise expert in the commercial world, having taught at Georgetown on franchising for close to 12 years, started his own franchise consulting firm called FranchiseWell, with clients such as IKEA, Snap-on Tools, Subway, Direct Energy, and The UPS Store. He did his doctorate on social franchise so it’s great to get his perspective from a long commercial experience now applied to the social sector.

On this episode, you’ll learn:

Why it’s important to learn franchising by studying how to use the franchising model, not by studying others’ model that uses franchising elements, since you only get part of the full franchise model.
Instead reverse engineer the architecture needed to achieve the desired goals. For many entrepreneurs, its reduced monitoring costs. It’s having a predictable result without having to be there beside the franchisee everyday.
One of the biggest failures of franchises, both in commercial and social franchising models, is HR – they bring on franchisees who don’t know how to hire, manage and fire employees.
A second big point of failure is they sell franchises to people who don’t have a good sphere of influence within the territory they’re operating in.
About architecture of the franchise structure, such as development agents that might take a territory who sell franchises to individuals.
Demand for a product isn’t enough for it to be franchisable. There needs to be sufficient profit so royalties can flow up to sustain the franchise structure.
Whether charging royalties is a must-have for social franchises and whether it can be avoided.
How to keep the relationship “sticky”, between franchisee and franchisor, so they keep paying royalties, including how to protect the value of the brand.
This includes how the franchisor creates an expectation about what the customer receives, so it’s an absolute must to be able to remotely enforce those standards.
How the right economic model is different for each country, which needs to be grounded in the economics of that country and the operating conditions imposed by the government.
What a potential franchisee should be looking at when assessing whether investing in a franchise is right for them.