The Right Stuff About Buying a Franchise – Lesson 4: Are You an Entrepreneur or a Frentrepreneur?

Many people buy a franchise because they want to work for themselves.  The phrase, “I want to be my own boss” is often the first on the lips of budding franchisees.  However, buying a franchise is arguably a step back from pure entrepreneurship.

For the pure entrepreneur, consider someone such as Richard Branson, now CEO and majority owner of one of the biggest and most admired companies in the United Kingdom.  From a very young age, Branson always sought to go his own way.  His first business venture was a student newspaper he started from scratch, a business he later sold to a multinational company for a tidy profit. 

Richard Branson considers himself to be a business and brand creator, someone who can reshape an industry through both innovation and an incredibly strong commitment to seeing things from the customers’ perspective.  By better responding to meet their needs than anyone else in the sector, his Virgin companies almost always carve out significant chunks of the market.  Clearly, Branson could never work for anyone else and, in fact, has never done so.

In the United States, Donald Trump is a superb example of an entrepreneur who always demanded total control of his business and his future.  While he worked with and for his father Fred, a Brooklyn-based real estate developer, during his college years, Trump created The Trump Organization during his early 20s.  His aim was to create the instant perception among potential clients and customers that his corporation was far more significant and expansive than it appeared, even though at first he was its only employee.  Like Branson, Trump has long been a lone ranger who has always needed to maintain primary control over any business venture with which he is associated.

If this approach is also your own favored approach for getting into business, buying a franchise may not actually be for you.

In summary, the franchising organization retains substantial control over what you can do, how you can do it, and when and where you can do it.  This information is contained in the franchise agreement that every new franchisee must sign.  While the restrictions on your behavior will differ from one franchisor to the next, the motivation for such constraints on your freedom is common to all.  That is, they are seeking to ensure that their offerings are standardized to the highest possible extent and that they maintain maximum control over their empires. 

If you have ever read Michael Gerber’s excellent book, The E-Myth, you will understand why this is so.  Developed appropriately, the policies and procedures to which you will be subject serve both franchisor and franchisee in positive ways.  They ensure that customers who visit any of the franchises receive similarly high levels of service.  They ensure that franchisees don’t drop their standards or personalize them in ways that compromise the franchisor’s reputation and brand.  Most importantly, they are designed to ensure that anyone with a reasonable degree of intelligence and a commitment to hard work can achieve them, thus limiting the reliance of the franchisor on the vagaries of individual brilliance and talent.

For the franchisee, the rules under which they operate limit the risks associated with starting a new business, since they are less likely to make dramatic mistakes.  Their potential customers may be already familiar with the brand and its characteristics, thus making it easier to develop customers and patronage.  Many decisions, particularly those associated with marketing, purchasing, and the creation of IT systems and databases, may be out of the hands of franchisees, therefore encouraging them to focus their efforts on building sales.  In all likelihood, franchisees will also benefit from the buying power and managerial support provided by their franchisor.

If this is more your ballgame, you are what I call a “frentrepreneur” rather than a pure entrepreneur.  Yes, you retain many of the characteristics of the traditional entrepreneur and likely associate yourself with their stories, but you act within a somewhat different operational context.  In essence, you deliberately choose to trim your wings in the knowledge that you will likely fly longer than other birds, recognizing too that you may also not get to fly as high as they do.

While accepting the downsides, this can still be a personally rewarding and totally appropriate business decision.  The world is full of franchisees who remain enthusiastic about self-selecting into a franchise system rather than starting from ground zero.  In fact, I walk past one every day, a bakery and pastry franchise, who proudly stated to me that he is the nation’s highest revenue franchise.  Not only is he delighted about this achievement, he is clearly making a great deal of dough with his dough!

In buying a franchise, it is therefore essential that you first examine yourself, your motivations and your relative need for control and autonomy before concluding whether you are an entrepreneur or a frentrepreneur.  In whichever industry you are exploring, ask existing independents about the benefits and costs of remaining outside a franchise group.  Also, ask current franchisees about the pluses and minuses that they consider to be part and parcel of being a franchisee.  It is only after you’ve reflected on this information that your true identity, as entrepreneur or frentrepreneur, will become clear.  Armed with this self-knowledge, a critical early decision will have been made.