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SMEs the difference between entrepreneurs and franchisees
| Guest post by: Dr. Rob Smorfitt |
Article Overview: There is a vast difference between a franchisee and an entrepreneur. what is the impact thereof?
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Free Download - SMEs – SMEs struggling in South Africa. Why? By Dr. Rob Smorfitt |
SMEs the difference between entrepreneurs and franchisees
The question that must be asked is whether franchisees are entrepreneurs? My belief is that few of them are! This does not mean they will not be very successful and create a lot of wealth!
The key issues in a business that lead to success are the strategy and the marketing. In a franchise environment the marketing and strategy are not controlled by the franchisee, but rather by the franchisor.
This would tend to make franchisees small business managers rather than entrepreneurs. So all those people out there who know they have that something missing, should give serious consideration to becoming a franchisee. They can still have that financial success, and the freedom of owning their own business, without the risk that the genuine entrepreneur has to contend with.
This is why I believe that franchising is an ideal tool for developing countries. Developing countries always find it difficult to raise the level of entrepreneurial spirit in their countries, and franchising is an ideal way to get people into the right kind of thinking. The genuine entrepreneurs will learn from the experience and soon leave to apply their minds to their own entrepreneurial opportunities, while those who are small business managers will remain within the franchise system. It also reduces the risk of supplying the development capital for the start up process, due to the higher success rate that franchisees have over normal entrepreneurial ventures.
Rob Smorfitt
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About the Author: Dr. Rob Smorfitt RSS for Dr. Rob's articles - Visit Dr. Rob's website Have an MBA and a PhD in entrepreneurship. Three key areas of ongoing research are entrepreneurship and innovation in large business strategy, the impact of legislation on SME development and SME finance. Run my own SME blog at http://sme-smb-smme.blogspot.com as well as an entrepreneurship and innovation for large businesses blog at http://innoveur.blogspot.com I have been self-employed since 1982. I have started or purchased in excess of 50 businesses since then. Most were sold again and a few were shut down because of a lack of profitability. Many were run by staff or family while I worked full time in my bigger businesses. Author of 6 books. Written articles for various magazines, newspapers and websites. Experienced in research within developing countries.
Click here to visit Dr. Rob's website  
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Related Forum Posts
Re: Franchise skills
- [quote="saraloves":1n1pw9z6]Why would you be looking for franchisees without technical skills? You're a computer services company, right?[/quote:1n1pw9z6]
Because franchisees don't have to be the technicians. In many cases the franchisee is the "business man", here to create and grow the business, not to operate it. If you look at Subway, many of their franchisees own several stores and I can tell you they are not the one making your sandwich. They are business men.
Becoming a franchisee
- Thanks for sharing FranchiseBrief.
I suspect the most popular reasons why entrepreneurs do not become franchisees is related to having independence, feeling like they are creating their own company, and setting their own rules. You touch on these characteristics in #1, 4, 5.
Re: Becoming a franchisee
- [quote="Evan":54cl6ijg]I suspect the most popular reasons why entrepreneurs do not become franchisees is related to having independence, feeling like they are creating their own company, and setting their own rules. You touch on these characteristics in #1, 4, 5.[/quote:54cl6ijg]
However, you can't really say that people buying into a franchise are entrepreneurs. If they were, they would start their own business. Being a franchisee means following a system without being able to change this system (of course comments and suggestions can be made to the franchisor).
Re: In-House or Outsource?
- Unfortunately, in the South African context, very few SMEs see outsourcing as an option. They believe it is too expensive, and they are paranoid that someone will "steal their ideas".
I believe that the three main functions that cannot be outsourced are marketing, sales and strategy. These must be done in house I believe. If you do not have the marketing skills then get them. Hire a consultant or attend a course, but get the skills. Even if you use a consultant, you need to understand what marketing is about, as no one knows your market like you do. Marketing is made to seem difficult and complex, but everyone who really understands their markets, can easily learn to do their own marketing.
In South Africa, labour legislation is extremely inflexibile, and consequently labour broking is a large industry. This is an ideal starting point for SMEs in South Africa, as it is a legally complex area, whih comes with severe penalties.
I say do it!
Rob Smorfitt
3,000 Congrats to GT!
- I logged in this morning to the forums to see that GT has hit the 3,000 post mark!
Congratulations GT and thank you for all the great comments you've added. You've really made a difference in the lives of a lot of entrepreneurs!
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