One of the most frequently debated questions about being a franchisee is: “Are franchisees entrepreneurs?” Many (if not most) people, including franchise experts will tell you, “No, they’re not.”
Franchise consultant Joel Libava, otherwise known as “The Franchise King”, agrees with that line of thinking. He told me, “No. The person who came up with the concept, and invented the franchise system for that concept, is the entrepreneur.”
Also voting no on the idea that franchisees are entrepreneurs is Rhonda Sanderson, owner of Sanderson & Associates, a marketing/public relations firm that specializes in franchising. Sanderson says, “NO! They are not and shouldn’t be. The true entrepreneur is the original franchisor who has the vision, takes all the risks. Franchisees are not without creativity and a good work ethic, but they generally are among those who play it safer and look for guidance and leadership.”
As much as I respect Libava and Sanderson, I’m not sure I totally agree with their assessments. It is certainly true, that in many cases, franchisees are not entrepreneurs. They simply purchase another’s concept, follow directions explicitly, and happily earn a living.
But there are no absolutes in entrepreneurship — and that includes franchising. There are many times that franchisees could be — or should be — considered entrepreneurs. Think about franchisees who take a gamble and buy into a newer system. While they might not be risking as much as the person who started the system, there’s still a lot at stake there. In cases like this the franchisor’s name is not that well established, undercutting a big advantage of buying a franchise. And the kinks in the system may not be worked out yet either.
Many franchisors (and not just the new ones) are very open to franchisee input. It was a McDonald’s franchisee who famously created The Big Mac (and another came up with the McFlurry), and a Subway franchisee brought Jared Fogle to the attention of headquarters (creating a marketing sensation). Technically these franchisees may have been more intrapreneurial than entrepreneurial, but the process (creating new products, selling the idea to the parent company) is the same.
While franchisees buy someone else’s system, they still have many of their own responsibilities operating their own unit (or units). In most cases, franchisees must hire and manage staff, attract and retain customers, create marketing campaigns, and establish and maintain banking relationships — essentially the same things entrepreneurs do.
Not every franchise purchase is a guaranteed success. As Rhonda Sanderson says, sometimes franchisors don’t “know when it’s time to step back and let new leadership come in and take the reins.”
There is risk involved, since you own a business that’s not totally in your control. This can be a negative factor, especially if the franchisor is having problems or struggling.
So, are franchisees entrepreneurs? I’ll leave the final word to franchise expert and attorney Andrew Caffey. Caffey’s view: “Franchisee is to entrepreneur as football player is to athlete. I have always thought that if a franchisee were an athlete he or she would be a football player, rather than a solitary long-distance runner or a golfer. That is, someone who has outstanding flexibility, strength, and athletics skills, but who chooses to play for a team where the team members all wear the same uniform and run carefully coordinated plays on the field from a written playbook. I don’t think anyone could deny that a football player is an athlete, just as no one could or should deny that a franchisee is an entrepreneur.”