Franchising Going Digital?

I knew it would come, in fact, I was waiting for one of my news feeds to have brought me a story about it a long time ago. An American serial entrepreneur, Jim Piccolo, has not only jumped into the world of franchising (for what seems the first time), but he has also leaped into the ‘new’ fandango world of digital marketing. Digital marketing is a relatively new field which has grown off the back of the rise of social media and all the channels that it opens up for business owners in marketing their businesses online.

Piccolo reportedly expects to invest $45million in starting the BizziBiz Franchise business, with the franchisee paying $18,000 for  a franchise with two employees and $25,000 for a franchise with unlimited employees. The franchisee will in essence be selling localised digital marketing – i.e. encompassing social media, search marketing, free and paid media, and blogging.

As ever, I am more than pleased to hear of new and innovative franchise models, but I do still hope that certain rock solution keystones are in place:

  • The Franchisor can recoop what he has invested in building the model
  • The franchise model is sustainable long term
  • The Franchisee can recoop his investment within a relatively GOOD period of time
  • The franchisee’s profitability is secured (i.e. the model isn’t based on a loose wing and a prayer)…obviously matched with a hardworking, amibitious franchisee!
  • The Franchisor makes money in the long term success of the franchisee (and not in the upfront fees and/or a wish for a quick exit at a high return)

So, I wish Piccolo the  best – its great to see a digital marketing franchise take to the stage – I will be very interested to watch how it progresses and grows over the next year.

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3 responses to “Franchising Going Digital?

  1. It does seem unbelievable – I wonder how many will fall for it, and sadly, as you say, is it going to be sold to the franchisee with good honest backing and something that has a resale value etc. or is he just going to end up rich. I wonder how legit he is?

  2. Franchising is an incredible model… I’m not not quite sure that having no territorial restrictions, monthly royalties, annual renewal fees and paying to have more visibility is the way to go. Love the innovative nature, but being franchise like is a better play for those looking to side with sensibility these days. Onward and upward in this “new age” economy!

  3. Hi there John,

    Do you mean that specific franchise example I mentioned in this post? I don’t generally agree with fixed monthly fees and no territorial restrictions for franchising I have to say – however it really does depend on the business and the financial model for success for both parties. I prefer a percentage based royalty fee (more dual motivation to grow).

    “Renewal fees” is most definitely not an idea I subscribe to by any means. The most an existing franchisee should pay on renewal (in my opinion) is perhaps legal costs for renewing the agreement after the initial term has expired (normally 5 to 10 years). “Paying for more visibility” is a bit blurry – but I’m assuming you are referring to the franchise business I mentioned in this post? Otherwise normally franchisees would help contribute to a National Marketing pot so to speak (via a Marketing Levy) in the UK – which is used towards national campaigns for the brand and business as a whole (perhaps radio, tv, newspapers, etc).

    If every business owner just subscribed to the idea of using ‘franchising’ as the structure by which to create their businesses – more of them would have a business that actually holds a value without the business owner. Sadly – not many do and the business is really only successful if the business owner is running it – which doesn’t leave much room for an exit strategy or getting a return for the blood, sweat and tears!

    Franchising isn’t perfect that’s for sure – but if done right and with the right intentions and motivations – it can be fantastic.

    Thanks for your comments John – glad you are reading the blog!

    Shelley

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