The tide is high - high enough to drown us all.
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Submitted by Randall Kohn on Fri, 06/15/2012 - 12:40am
Thread:
In the end there won't be any such thing as a local economy, will there?
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Taking advantage of desperate people
Franchise deals seem to proliferate in hard times. Promoters are taking advantage of people desperate to regain employment and control their economic destiny. The idea is that the franchise is a start your own business kit. I know a couple of people who did this, who thoroughly enjoy entrepreneural life, but hate their franchise agreement. In fact, the franchise promoter brings very little to the table for most of these. One of the couples I am friendly with dedicated a couple of hours every week to going through all their records and the franchise agreement, looking for an event of default. It took them a year, but they found one and terminated the deal. They never looked back. I suspect that their story will become increasingly common as these sorts of promotion schemes become increasingly common.
I was thinkng more of the existing independent local
dry cleaners and the harm this might do them. Is there really any shortage of drycleaners? I doubt it. If this takes off, something has to give, and I suspect it will be the local establishments.
Load vs. No Load
Yes, a limited market will weed some of those operators, and I suspect that dry cleaning is a shrinking market. The problem for my friends is that the franchise takes more out than it contributes through brand identification. Thinking of the couple who got rid of their Mailboxes Etc. franchise agreement, their bottom line jumped significantly when they were able to independently market with the money that had been going to Mailboxes Etc. Undoubtedly there are circumstances where the opposite is true. The franchise deal is like investing in a fund with a significant load. It may be that the fund manager is worth what you would pay, but I am inclined towards skepticism.
In the case of a dry cleaning brand available through a franchise, I suppose it depends on how people actually select their cleaners. I do that so seldom that I would not be a good test case on whether or not a franchise deal for dry cleaning would be a good idea. In general though, I get to know my local shopkeepers and see them as the brand, not the national presence that may be indicated by a label like True Value.
I am inclined towards hope when possible. I think we are on the cusp of a village life renaissance. As shipping costs rise and our economy becomes ever more top heavy (think of it as a significant load), the opportunity for locals to compete should grow. My local hardware store is not making its owner rich, but it is effectively competing with the big box alternatives mostly 20+ miles away. A tool repair guy just set up shop also within about 20 miles. It's a whale of a lot cheaper to use him and buy good tools, than it is to buy the disposable crap that Home Depot sells. He is expanding. I own my own small sawmill, but a number of people I know have gone back to buying locally milled lumber for all the obvious reasons: it is not trucked long distances, there is no extra cost for a big box store to inventory and market it, and you know how it was dried so it is not necessary to quickly get it nailed up to avoid lumber that turns itself into a pretzel. Now, it is necessary to get the local code enforcement people to accept something other than grade stamped lumber. I want to return to the days when we circulate most of our money locally instead of sending it to national corporate headquarters and international manufacturers. I think you do too. A Tide franchise may be successful, but I think it is more likely to be an idea whose time has passed.