Franchising as a Growth Strategy

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Last year Steve Nelson, founder of Unishippers spoke at the Utah Valley Entrepreneurial Forum. Among other excellent comments he indicated that franchisees are far more successful at staying in business than other startups. His statistic was that 94% of franchises are still in business in five years compared to only 15% of other startups.

Steve Nelson did a great job of setting up franchises in every metro area in the U.S. for his company (which aggregates shipments from many smaller businesses in order to qualify for big volume discounts with major shippers and pass those savings on to their customers.)

I doubt I’ll ever own a franchise, since I’m more of an information technology entrepreneur, but I do love Jamba Juice and Great Harvest Bread Company. If I ever do purchase a franchise, I think it would be with a company that makes money and helps people be more healthy at the same time.

There is a history of Great Harvest written by company founder Tom McMakin called Bread and Butter which traces the growth of Great Harvest from one bakery nearly 30 years ago to a $60-million per year company with 140 stores in 35 states (as of 2001).

Some of the fastest growing companies of all time have used the franchise approach to literally spread to the four quarters of the earth. McDonalds obviously comes to mind; so does Blockbuster.

I’d like to compile a list of books that tells the inside story of companies that grew fast through franchising: please comment on this blog if you know of one.

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2 Responses

  1. Alex

    The McDonald’s book (McDonald’s – Behind The Arches) is a great one about building a company via the franchise model. It’s too bad that the McDonald’s franchise model is now so far from reality in that it no longer qualifies anyone other than existing franchisees or multi-millionaires with significant restaurant operating experience. Either way, they have arguably built one of the most powerful franchise companies in history.

  2. Jim Bursch

    I’m thinking of franchising as a business model for CADCOOP directories, city-by-city.

    In order for the directories to have local feel and flavor, they need to be done locally. This also enables tapping the local advertising market in a more intimate manner that can’t be done from a national headquarters.

    Do any precedents come to mind?

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