Blog Post: Supporting Local Businesses, What about the Franchises?
[MENTION=20262]Bunkerboot83[/MENTION] I have friends that own franchises ,I have this debate with em ALL the time, whats funny is they consider themselves a LOCAL business ,one even called himself a MOM and POP shop… I say how MOM and POP are you when you write that check to the franchise owner every month
Well, I can’t completely see the logic that they are not local. The franchise owner and all his employee’s are local. They spend their money in the local economy and pay local taxes. Only the royalties are sent to the corp office. It’s not like a big chain store that just opens up a store in the community and all the profits go out of the area, they franchisee lives here and keeps his money here.
[MENTION=4853]phinkle[/MENTION] I’ll give you that one! I was referring more to people that do the lil Pampered Chef type thing, I just dont see that as a local business, I could be wrong
I think a franchised business can be considered local. But many of them would fall outside the lines of being considered a true local or community business.
As an example, going to your local McDonalds franchise for lunch is vastly different in community impact than spending money at your hometown ACE hardware & feed store. Part of this is the “master business plan” of the corporate office. I think a big aspect is how much control the local owner has over the business itself. Ace Store owners become owners of the actual Ace Corporation and can run their store as anything from a local hole in the wall - to a large retail establishment and can switch things up based on individual community needs or wants. McDonalds franchise owners just don’t have the freedom to become a breathing part of the “local” community, they aren’t going to bring out a plate of local lobster as a special just because a community in Maine would love it.
Yes franchises can be locally owned or operated, but many of the “local owners” have their hands and money tied to a non-local corporate office. In reality a franchise is only a name or brand. Owning a franchise is like owning a home with requirements to pay to an HOA. You really don’t own your home, because the HOA has more rights over your property than you do! If you quit paying - the HOA can kick you out and get’s a chunk of the sales price before you do. These guys DO NOT actually OWN a business, they are in fact PAYING RENT for a name - while accepting the transferred liability to themselves for the businesses success or failure.
A huge problem is also that in addition to thee average 6.7% royalty fee, a franchise has to buy product from the corporate source - which tends to be out of area also. They don’t have a choice.
In my un-researched observation (opinion) the majority of money that goes back into the local economy from these franchises is merely employee and owner pay. And since a franchise tends to undersell the local businesses and focus on quantity vs. quality, they make less profit per service/product. You then take this reduced profit, scalp off a minimum 6.7% of pure royalty. You are then forced to pay your employees a lower wage than they would get by working for a truly local business… Then you get lower quality employees - who don’t have the extra $$ to spend locally… And I could go on lol… Maybe I’ve spent too much time in the Fish pond watching other businesses swim lol
Good blog.
For many franchises, you are probably right about lower quality and pay for employees. I looked to a couple franchises when I started. They sounded good until I found out what it cost to start up. There was no real option for me than doing it myself. Looking back it was a good decision. The only decision.
A+ blog
If the owner of the business does not have a home in town where I can go to clean their windows, I do not consider them to be a local business. I try to spend as much of my money as I can within my community. If we locals don’t stick together, the chain outfits will run us all out of business
We now have a Fish franchise in our area. I bid a big job the other day and Fish was several hundred dollars under my bid. I told the client I couldn’t match their price. He called a couple days later and gave the job. He wanted to support small business. And I was worried. Lol
Awesome! I think my most loyal customers are people who are local and small business conscious.Very cool!
You should not worry about the minnows or the others, Your a step above the rest Phil.
Great article. I agree and like to support the local business when possible. Occasionally, I just can’t because the local business isn’t very good. But I will give them the benefit of the doubt and try them several times before going someplace else. I just like the whole vibe so much better. For me it’s not about snobbery to avoid walmart like the plague, it’s the effect on the local economy - the principle of the thing.
Plus, it’s just good networking supporting the local businesses in the area. They will get to know you and support you in turn. Win win.
Interesting blog and one I agree with wholeheartedly. In saying that, a lot of people pay lip service to the concept but their actions aren’t consistent with that. It’s similar to the green/environmental concept - a lot of companies talk about how they are using green suppliers etc. but the fact remains that if they can save an extra few cents by using a ‘non-green’ supplier, they will.
On the topic of franchises being local, I had an interesting conversation yesterday. I bumped into a direct competitor (who happens to be a franchise) for our glass graffiti business. This guy wouldn’t have known who I was as I was doing some sub-contract window cleaning and wearing the shirt of the main contractor. This particular franchise is based in the US but the local franchise pushes the notion that they are a New Zealand company in all their advertising. Anyway, he was using a Wagtail so I asked him where he got it. “Australia”. I pointed out that they could be purchased locally but just got a blank look in return. So, basically, from what I can see, this franchise buys its main equipment from the US, and pays a royalty back to the US master franchise and then is happy to buy other equipment from Australia but still pushes the concept that they are a local company? Local compared to what?!
