The growth of franchising has been accompanied by an ever increasing number of ex-franchisor executives, ex-franchisees and retrenched executives setting themselves up as franchise consultants.

However, the very term franchise consultant, is in itself an ironic anomaly.

Franchising is about tied distribution for manufacturers or wholesalers and about rapid expansion with limited capital for food or service businesses.

This article deals with manufacturers or wholesalers. Their main goal is to maximise sales by means of the highest volume and lowest cost marketing channels. Franchising does not, of itself, deliver high volume or low cost.

There are many other marketing channels that can  deliver high volume and low cost, including:

Dealerships

Distributorships

Agencies

Joint ventures

Company owned operations.

Manufacturers need to evaluate all cost-control-coverage tradeoffs. However, when they talk to franchise consultants, these consultants focus on what they know – franchising.

 And, with franchise legislation, a franchise program is far more expensive to develop and operate than any of the above alternative marketing channel strategies. Typically, legal fees for drafting a franchise agreement and preparing disclosure documents required by the franchise code costs around $25,000.

 Manufacturers want tied and preferably exclusive distribution of their products. On the one hand, motor vehicle manufacturers get tied distribution through franchising.

On the other hand, Telstra achieves tied distribution through a license program for its Telstra Shops.  Motorola and Stihl Power Tools achieve virtually exclusive distribution through dealer networks and Tattersalls achieves tied distribution though an agency network.

What marketing channels would Telstra, Motorola and Tattersalls currently use if they had worked with franchise consultants?

If it’s impossible to buy hamburgers in a pizza franchise or pizza in a chicken franchise, what’s the likelihood of being advised to develop a dealer, distributor or agency program by a franchise consultant?

And, to return to the headline, are franchise consultants really consultants or are they simply franchise packagers? I’ve made up my mind.

 You decide