Franchising & Licensing
Two Powerful Ways to Grow Your Business in Any Economy
Author: Andrew J. Sherman
Pub Date: April 2011
Print Edition: $45.00
Print ISBN: 9780814415566
Page Count: 464
Edition: Fourth Edition
e-Book ISBN: 9780814415696
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PREFACE TO THE FOURTH EDITION
It is hard to believe that 20 years have passed since the publication of the
first edition of Franchising & Licensing in 1991. The impact of technology
and globalization has had a permanent effect on the dynamics of the franchise
relationship. When the manuscript was being written for the first edition
in the late 1980s, I could not have envisioned the many changes in
today’s franchise relationships or the diversity in the number of industries
and companies that would pursue franchising as their primary growth strategy.
It has been my honor to work with companies launching franchising
programs in dozens of different industries and at various stages of growth—
ranging from start-up to Fortune 500 companies—all over the globe.
A wide variety of recent events and trends are affecting the growth and
development of domestic and international franchising:
❒ From the franchisor’s perspective, the weak capital markets have limited
access to the resources needed for more organic or traditional
growth strategies, thereby making franchising the strategy of choice to
accomplish such objectives and brand building, provided that the prospective
franchisee can access the capital they need to develop the territory.
❒ From the franchisee’s perspective, more families in a recessionary environment
(and with job losses averaging 300,000 per month) want to have
greater control over their own destiny and are pursuing many different
types of franchised opportunities as a way of owning their own businesses.
❒ The very weak residential real estate market has fueled the growth of
many different types of home improvement and home services franchisors,
as Americans invest less resources into the pursuit of making
their homes more comfortable.
❒ Trust building, proper governance, and leadership have become hypercritical
in this post-Madoff era. Franchisors must have integrity when
interacting with franchisees, or their systems will fail.
❒ The ease of access to technology, as well as a desire to avoid the hassles
(and fears) of going to a shopping mall, have fueled an increase in online
sales of products and services. Franchising systems are forced to offer
sites that facilitate e-commerce and that create a balance for sharing
these new sales and customers with the franchisees in their systems.
❒ The improvements in Internet technology and smartphones, as well as
travel/logistics concerns, have changed how franchisees are recruited,
meetings are held, and data is gathered.
❒ The impact of the Internet on franchise sales (as well as related legal
implications) are discussed in new sections in Chapters 6 and 10 of this
Yet, as volatile as the global and domestic economies have been since the
publication of the third edition, franchising has remained relatively stable.
Each year, hundreds of new companies launch new franchising programs,
and tens of thousands of families invest in franchised businesses as the first
step in their journey toward achieving the American dream. Even with all of
the new technology and all of the new developments, franchising is, and
always will be, about mutual commitment, trust, fairness, and communication
in a uniquely interdependent relationship that has helped fuel our economy
for nearly 100 years.
History has shown that the leveraging of intellectual capital can be an
effective and capital-efficient way to perpetrate business growth whether
economic conditions are weak or strong. Companies of all sizes and in many
different industries are realizing that their intangible assets can be a source
of new revenue and profit centers and that they can thereby bring greater
control, predictability, and loyalty to their distribution channels. The critical
importance of adopting this more strategic perspective to the management
and leveraging of intellectual capital is discussed in greater detail in the first
Andrew J. Sherman
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