Is a franchisee an entrepreneur?
Is a franchisee an entrepreneur? This is an interesting question that keeps popping up. What’s interesting is that everyone seems to have an opinion but what’s even more interesting is that there doesn’t seem to be an agreement about whether a franchisee is an entrepreneur. What do you think? Post your comment. Here’s some observations and comments that have been made.
When you are having a discussion and sharing an opinion a good place to start is with definitions. The dictionary definition I found for ‘entrepreneur’ says “someone who organizes a business venture and assumes the risk.” The definition of a franchisor is “the person or group that owns the franchise concept and allows others to use it through a licensing agreement.” The definition of a franchisee is “someone who receives or pays a fee to receive the licensing or franchise agreement.”
If you put all the above definitions together its clear a franchisor is an entrepreneur and depending on your point of view, the franchisee may or may not be depending on how you see the amount of risk they take.
Perhaps there is a better way to define whether a franchisee is an entrepreneur and that’s by creating a new word and with it, of course, an appropriate definition.
To achieve this definition, let’s look at the role of the franchisee.
The franchisee buyer before they buy into a franchise concept has many options. They can start their own business, they can buy an existing business or they can look at the thousands of different franchise concepts and decides which option makes the most sense to them. So it’s the franchisee’s option to find the right concept that works for them. However, what stands out is that the franchisee buyer has the option to start their own business or buy an existing business but instead chooses the third alternative which is to buy the concept that appeals the most to them thereby reducing a lot of the initial risk.
If you agree with the above thought then a franchisee buyer is not a true entrepreneur as they are relying for a lot of their success on the vision of the franchisor, the concept that’s been put together which is generally very proven, includes the initial and on-going training, the sales and marketing material and proven systems that do things like manage the collection of customer money, a book-keeping function and financial statement reports system and other items that greatly increase the franchisees chances of success.
Some other observations I’ve made when trying to answer this question is that franchisee buyers tend to be a little more conservative. I am not talking about their politics but I am talking about the amount of risk they are willing to take. A true entrepreneur tends to tackle risk head on and not be held back by the very real chance of failure. That’s what the franchisor is doing. Putting their concept together with all its moving parts and then hitting the market to see if their concept will sink or swim. Because the entrepreneur takes the initial risk, the franchise buyer is able to measure the franchisor’s success by seeing how many franchisees adopt the concept but more importantly, their level of success. Or to use a gambling term, a franchise buyer is able to hedge their risk to see if others are being successful.
Is a franchisee an entrepreneur? I think a better and more useful word is intrapreneur? How do I define an intrapreneur? My definition of an intrapreneur is a franchise buyer that is open to expert guidance, often very methodical or able to follow a set of processes or procedures and able to bring one highly developed skill set to complement the franchise system. For example, a lot of franchise buyers come from corporate America. They have worked in a large corporation and developed strong management skills or strong finance skills or strong sales and marketing skills and perhaps either tired of the corporate model or hit a ceiling where promotions may be fewer and less rewarding. Due to these limitations and an interest to see if they can enjoy the rewards of owning and operating their own business they decide a franchise is a great option for them if they find the right concept.
Is a franchise an entrepreneur? In my opinion a better word is intrapreneur. Regardless of the word you use, owning and operating a business is great fun and brings great rewards but at the end of the day, it’s important to carefully and thoroughly explore the options and do the necessary due diligence to make sure it’s a good investment and a good fit. Not everyone is cut out to be in business be it owning and operating a franchise or an independent business concept. If you get it right it means you get to follow your dream as opposed to working for someone else and building their dream.
If you want to know more about buying a franchise to see if it’s right for you, give me a call on 916 570-2674 and ask me your questions. If you first prefer to get some more information visit my website – Successfully buy a franchise