Guest Post: The Corporate Store Conundrum -- To Own or Not to Own?

Every once in a while the boss needs a vacation. Sure, he will probably be tied to his iPhone and logging on at random early hours of the morning, but hopefully he has time for a boat drink and some well-deserved rest in a beachside cabana. With that said, you’ll be hearing from my colleague, Chad Cohen, Vice President of Fish Consulting, today and maybe some more in the future. Take a read below and don’t hesitate to share thoughts or comments -- because that’s what makes blogging so great.

Ask a group of franchisors for their opinion on the benefits of company-owned units and you’re bound to get any number of varying responses and theories, all with their own merits. It’s an age-old question in franchising that continues to plague both emerging and mature concepts. What is the right mix? Should we operate company units? Is it best to focus our growth only through franchising?

For many emerging concepts, operating a company location can be troubling. Not only can it be a financial drain, but it may also divert limited resources inside your corporate office away from the network.

However, I would argue the risk is too great not to own and operate company locations. Both new and existing franchisees expect their franchisors to have a stake in the game.

How can you expect to set an example, set a precedent or prove that a system works if you’re unwilling to assume any responsibility for it? It’s not a complicated business theory, just basic human nature. Corporate owned units allow you to build the necessary infrastructure needed to support the operational elements of your concept. Plus, who wants to invest in something that you’re unwilling to invest in yourself?

Another benefit often overlooked in company owned stores is market penetration. It’s no secret that consumers regularly equate a successful brand with the number of locations operating in a region. Owning company units in a target DMA affords you the luxury of building a fast-track presence. Additionally, and almost more importantly, company owned locations present prospective franchisees with the ability to touch and see your brand in lieu of just conceptual discussions.

Corporate locations allow you to share a front-line prospective with your franchisees unlike any webinar, conference call or market visit can provide. It’s a galvanizing Three Musketeers “All for one and one for all” battle cry for the ever-elusive consumer dollar.

The opening of corporate locations is not cheap and nobody said it is easy. But the benefit of maximizing growth through a healthy mix of franchised and corporate units beneficially serves the integrity of your brand. It’s a sound business strategy that presents an integrated vision not only to your consumer, but to your prospect as well.