Who here know how franchises work? They are one of the best examples of how government and corporations work together to fuck over the people. http://en.m.wikipedia.org/wiki/Franchising You start by buying the rights to own a franchise. For examples, I could buy the McDonald's down the street and operate it as my own small buisnes. It works exactly line operating your oown buisnes except with a few exceptions. To start, you must pay royalties. The corporation literally just takes x% of your proffits for themselves in exchange for using their "idea". You also mmust follow a strict set of rules laid down by the corporation, and must buy all your product from the supplier that that corporation tells you to buy from. This takes away free market competition. Its basically a cartel. On top of that, the corporation forces you to pay for changes they want. For example, if the menus change, they tell you "buy this Mrs menu" In a nutshell, it allows corporations to run shops at virtually no risk. All risk falls upon the franchise owner, and the corporation rakes in proffits. Even if the franchise is failing, the corporation makes money. This also encourages the behavior of opening stores near eachother. This creates competition for the franchise owners, skrewing them out of sales, while making even more money for the corporation. This combined with other rules and regulations such as minimum wage laws, licensing, and taxes, creates an enviroment where it is near impossible for an average Joe to start a buisness and be successful. When you talk about raising minimum wage, all this does is shrink the gap between lower and.middle class, while having virtually no effect on the upper class. This is thanks to ffranchising. Because the franchise owner is responsible for labor. So the next time you try to stick it to the man, just remember that the man is using the 99% as human shields. -yuri
you aren't just using their idea.. you are guaranteed a clientele the day you open your doors, they purchase national advertising, they endorse sports teams, venues players etc.. so that royalty money pays for all those things a regular business would normally have to pay for. and that's the idea of a franchise the rules and buying product from the same place. The idea of a franchise is consistency, the big mac in NY is the same as the one in CA. if they were allowed to use other vendors there would be no control of product. McD's spent decades perfecting a formula that works.. so when folks buy into a franchise they are almost guaranteed success. when you open a new restaurant you have a 70% chance of failure in 6 months, buying into a franchise removes that risk.. so those royalties aren't as bad as one might think. you say it allows the corps to run at virtually no risk, but you can say the same about the operator. They have much less risk in a successful franchise than they would renting a building and starting on their own.
you are talking about theory. In reality it only helps the top and hurts the bottom. Do you know anyone who owns a franchise? Often they have to take a.second job -yuri
A lot of people who are in the market to buy a franchise usually don't buy it as their sole source of income... AW isn't talking theory I'm pretty sure he owned a restaurant or something like that
I have a friend who "owns" 3 or 4 subway sandwich shops, and he seems to be making money. I mean he has a lot of nice things and a pretty nice house.. but i never saw his bank statements lol. He could be broke as fuck for all i know also have friends who failed miserably in the business on their own and lost everything. Have one buddy who owns an Italian restaurant and has to deliver mail on the side to pay bills. I'm personally not a fan of franchise places, you aren't really the owner and you do have to bow to the masters on every damn penny... and every cup, lid, mustard packet etc... when you say in reality "it hurts the bottom" are you referring to the franchisee as "the bottom?" @lenny.. yeah. 30 years in that horrible business.
I do. One friend owns a Subway sandwich store, which is one of the cheapest franchises to buy into (~$25k). There's no way a new restaurant can sustain steady business within the first few years of inception in comparison to an already established franchise. I'll go back to the McDonald's topic since that's usually the "benchmark" for franchise examples. To open a McDonald's, you need to have $1 million in liquid assets (cash, marketable investments etc), AND you have to open 3 stores, you cannot open just one. This is to ensure #1 you wont make the company look bad because you canr afford to run it, and #2 you're not just in it for a quick dollar. As said before, buying into a franchise seriously reduces risk, as you dont need to create a new business plan.
I disagree with what you find troubling. If you want to open your own diner you can do that. The government or franchise owners won't stop you. But if you want to open a hamburger joint and call it McDonald's and use their ingredients you have to follow their rules. If you don't like it open Yurigadaisukida's and sell Big Yuris. It's a free market.
I agree with everything except that last statement. America has anything but a free market. It is a totally state controlled and regulated to the point of absurdity market.
no.. franchising is just another business model. it's not a way to make the rich richer. obviously parent company will profit, but you can be a very successful franchise owner. additionally if you wish to open your own restaurant and it becomes so popular that someone is willing to pay you money to franchise and open another location under your name, as a responsible business owner you would lay down some fundamental rules that protect your integrity and brand.
Exactly this. Yuri, you know I love ya brother and rarely do we not see eye to eye but I think you are waaaaayyy off on this topic. Would we be better off without government having anything to do with franchises? Obviously. Anytime we can cut government out of anything we are all better off but I don't think the two are totally hand in hand in this situation.
the main issue I'm trying to bring though, is the fact that the corporate model, and laws and regulations and permits, encourage franchises and discourage starting new buisneses. We've created a system where its near impossible to start your own private buisnes mostly because of costs from taxes licenses and regulations. Do you know you have to pay the government for a "franchise licence"? -yuri
I've had 2 successful businesses. Both of them were based on my abilities and skills to be able to produce a product that was in demand in a certain niche market. I had all the necessary licenses and insurance, in order to demonstrate to my customers I was legitimate and to not expose them to possible problems due to accidents or ineptitude on my part. If you have marketable skills (not flipping burgers) it's easy to make a good living working for yourself...I did it, and made enough to allow my wife to be at home and raise our kids....you've just gotta use your head and not expect to be able to do it on someone else's idea...like what you're doing when you buy a franchise.
Surely franchises are very much part of the free market ? Great business model for those that are more business rather than personality.
I think it's technically harder to buy a franchise because you have to meet their standards, ie. $1mil in assets, adhere to their standards, etc. Really any joker who doesn't have a completely destroyed credit and some equity can get a business loan and open a business. I think standalone businesses will always have a market because there's people like me who don't like franchises and their cheesy atmosphere and substandard food.
Also, the local franchise owner doesn't have any legal way to respond to changing market conditions and consumer preferences. Think McDonald's. Mind you, other newer franchises have stepped in to fill the gaps. Still, for me, owning a franchise would be an absolute boring and sad proposition. I'm quality and heart- felt driven!