Why isn't the franchising model popular online?


3

Why aren't there popular examples (actually I haven't seen any) of the franchise model applied to online services?

E.g. franchise of a given service for local (different language) versions or franchise for maintaining specific sections of a broad service (for example an online apparel shop offering franchise opportunities for the shoes section or the scarves section.

Business Model Franchise

asked Oct 26 '13 at 00:59
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Drabsv
36 points
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2 Answers


2

Franchising is necessary if you want to grow fast in a capital-intensive business. Typical example: McDonalds. Opening a new restaurant requires quite a bit of a capital and is risky. McDonalds avoids the need to have cash (or debt) to open a new restaurant and it reduces its risk. McDonalds provides services (marketing, R&D of creating new product, sourcing raw ingredients cheaply) that scale without lots of investment.

Those capital restrictions don't apply to web services. Tumblr became one of the biggest sites on the internet with a handful of employees. They simply don't need anyone's help in reaching, say, Brazilian market.

Then there's an issue of trust. To offer hypothetical Brazilian Tumblr, someone would have to have access to Tumblr's servers. This level of access is not how physical franchises work: McDonalds reveals very little (relatively speaking) to their franchises.

In the older days franchising of sorts was actually popular. For example, a game that was popular on Commodore 64 would often be licensed by some third party and published on other platforms (Atari, Amiga etc.).

There were also cases of companies localizing e.g. early word processing software, for their home markets.

But those days are gone because today a company that is successful can easily afford to do the relatively small amount of work needed to localize/translate software.

answered Oct 26 '13 at 10:04
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Krzysztof Kowalczyk
1,950 points
  • "today a company that is successful can easily afford to do the relatively small amount of work needed to localize/translate software." - yet, it's interesting that they are not in any hurry to do so and business opportunity seems to remain unutilised. – Drabsv 7 years ago
  • If you have an opportunity that you've recognized that the company hasn't capitalized on, then either (a) do it yourself!, or (b) put together a pitch deck and go to them with your idea and present yourself as a willing and capable resource! – Theao 7 years ago
  • Who is "they", @drabsv? Obviously I'm not speaking about every internet company ever, but Facebook, Google, Yahoo, AirBnB and quite many others are aggressively localized. And if a company won't put effort into translating their web pages, they won't put effort into building franchising either. – Krzysztof Kowalczyk 7 years ago
  • @Krzysztof Kowalczyk - by"they" I mean most big companies. Facebook, Google, Yahoo, AirBnB are quite big, that is they are not the majority of companies. You have Yandex, Zoho, RightMove, LinkedIn, for example, which are not localised. My point is maybe he amour of work needed to localise is not that small as it seems. Apart from translation, you also need local advertising, maybe changing some aspects of the product (valid for real estate portals), local pricing, etc. In such cases maybe franchise could work better but it seems no one is even trying it. – Drabsv 7 years ago

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I guess white-labeling applies better to online services. You will find tons of examples of services that offer the white-labeling model. It is not exactly the same as franchising but there are definitely similarities.

answered Oct 26 '13 at 05:22
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Gdoming
61 points

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