From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company [Hardcover]

Scott A. Shane (Author)

Book Description

Publication Date: January 21, 2005

In this book, Dr. Scott A. Shane systematically helps businesses assess the pros and cons of the decision to franchise.  This book focuses squarely on the issues and challenges faced by franchisors. Shane answers key questions such as: What do successful franchisors do differently from unsuccessful franchisors? Why do some companies in an industry choose to franchise while their competitors don't? How does the decision to franchise affect your ability to compete with firms that don't? For businesses that choose to move forward, Shane presents proven principles for every aspect of building a successful franchising system, including: recruiting, selecting, managing and supporting franchisees; establishing territories and pricing; managing expansion; and navigating the unique legal and institutional challenges of franchising.

Editorial Reviews

From the Back Cover

In this book, Dr. Scott A. Shane systematically helps businesses assess the pros and cons of the decision to franchise.  This book focuses squarely on the issues and challenges faced by franchisors. Shane answers key questions such as: What do successful franchisors do differently from unsuccessful franchisors? Why do some companies in an industry choose to franchise while their competitors don't? How does the decision to franchise affect your ability to compete with firms that don't? For businesses that choose to move forward, Shane presents proven principles for every aspect of building a successful franchising system, including: recruiting, selecting, managing and supporting franchisees; establishing territories and pricing; managing expansion; and navigating the unique legal and institutional challenges of franchising.

About the Author

About the Author

Dr. Scott A. Shane is Professor of Economics and Entrepreneurship at the Weatherhead School of Management at Case Western Reserve University. The author of numerous scholarly articles on franchising, Dr. Shane has consulted with many current and potential franchisors on the topics outlined in this book. Dr. Shane has also written or edited seven other business books including: Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures; Academic Entrepreneurship: University Spinoffs and Wealth Creation; A General Theory of Entrepreneurship: The Individual-Opportunity Nexus; Entrepreneurship: A Process Perspective; and Foundations of Entrepreneurship. Dr. Shane holds a Ph.D. from The Wharton School, University of Pennsylvania.

© Copyright Pearson Education. All rights reserved.

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Product Details

• Hardcover: 256 pages
• Publisher: FT Press (January 21, 2005)
• Language: English
• ISBN-10: 013149421X
• ISBN-13: 978-0131494213
• Product Dimensions: 9.1 x 6.3 x 0.9 inches
• Shipping Weight: 13.6 ounces
• Average Customer Review: 5.0 out of 5 stars  See all reviews (3 customer reviews)
• Amazon Best Sellers Rank: #164,634 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

8 of 8 people found the following review helpful:

5.0 out of 5 stars A Retail Start Up Kit, June 2, 2005

By 

John G. Hilliard (Toronto Canada) - See all my reviews
(REAL NAME)   

This review is from: From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company (Hardcover)

Whenever I go to any strip mall or general retail area I start to wonder if there are non-franchise establishments left. Almost everything is franchised and if there is not one near you just wait because is coming soon. This book details out some of the facts about the franchising boom. It states that almost 2,300 companies franchise and that there are about 770,000 outlets that generate about $1 trillion in sales annually. Yes the world has gone franchise and the best thing to do is hop on the band wagon.

This book talks about why some firms in some industries chose to go the franchising route and when others do not. One of the main goals of the book is to explain when franchising is a good strategy for a firm and when it is not. There are advantages and disadvantages to this strategy and the authors try to walk you through them. The authors also try to help the reader determine whether you are better off using franchising in your own business.

Overall I found the book to be interesting and full of great information. The authors seem to know their stuff and if you are involved in franchising in any capacity then this book should help you if for nothing more then to gain a better understanding of the big picture and understand the drivers for the business model.

5 of 6 people found the following review helpful:

5.0 out of 5 stars Essential reading for both franchisor and franchisee, November 3, 2009

By 

Don Sniegowski (USA) - See all my reviews

This review is from: From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company (Hardcover)

As an editor for Blue MauMau, the web's #1 news site covering franchised and small businesses, I interview quite a few CEOs and leaders about franchise issues that they struggle with. I also am in the position where I read quite a few books on franchising. Most are self-help books, providing glossaries of franchise terms and advice for those needing a lesson or two from a Franchise 101 class. E.g. what is a franchise chain? what should be in a franchise disclosure document?

Then there are books in which consultants instruct would-be franchisors based on their own experience. That is to say, follow these five steps to organize your franchise salespeople for selling success, take my course to see whether or not franchising is right for you, or how a more driven CEO will make your franchise chain a success.

What's missing from most of these books is the development of a strategy for franchising a business based on what economic research shows are the drivers of franchise success. Scott Shane, professor of entrepreneurial studies at Case Western Reserve University, venture capitalist, consultant to franchise chains, and author of various books on small business and franchising, is the author of From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Business. In its pages one finds the building blocks of an actual business model, explanations of franchising for strategists, and identifications of drivers of a business.

Of the two choices, franchising a chain of ice cream shops or brokerages that sell through the Internet, which new franchising chain would you choose that best fits the franchise model and the chances for success? Shane answers in the book why the economics clearly say ice cream shops.

Franchising has its own set of problems that must be understood, managed and controlled. A new franchisor better understand franchisee free riding, loss of intellectual property, holdups (termination threats) and underinvestment. And no matter how much of a saint that the franchising firm's founder thinks of himself, there are built-in conflicts between a franchisee's self-interest and the franchisor's, such as obsolescing bargaining and collective control.

Some self-made entrepreneurs may be averse to such reading. After all, those words are a mouth full. The concepts strange. They may think that there's nothing that a great sales team and the right kind of franchise buyer won't solve. But these inherent conflicts call out for the need of proper mechanisms, structure and management. If the franchise system is poorly conceived, no salesperson and no super selection of franchisees will save the franchisor.

Consider the franchise fee and royalty rate: many franchisors consider the process of setting these to be as simple as, "Hey, $50,000 sounds nice and even, as does a 10 percent royalty fee. Everyone else does it." Their franchising consultant may have cut their franchise model out in cookie-cutter fashion. Unfortunately, those decision may have just set the corporate train in the direction of bankruptcy because the royalty rate and franchise fee chosen do not fit the company's strategy and economic realities.

For those who want to maximize the potential of their franchise system, this is the book for them. It's greatest weakness is that its backup studies that help make its points make it read somewhat academic at times. But besides two by two grids and clear charts showing lines and curves with diminishing returns, it also provides street-wise real world examples. These models and examples help identify which franchise route best maximizes stakeholder wealth. Even private equity investors who buy franchising firms will be enlightened.

From Ice Cream to the Internet helps the entrepreneur calculate when franchising is a good strategy for making money and when she is better off with a different strategy. It also helps to identify and quantify the risks of franchising and to fit the business model to a particular industry. It aids in evaluating when setting up a franchise is more profitable and strategic for a franchisor and when a company should set up its own nonfranchised chain in order to raise profits. Its information assists in deciding how many master franchisees, area developers and franchises to have. If a franchisor fails to think about the ratio between company-owned and franchised stores, he decreases income, loses control and increases the risk of failure.

This book is also essential for franchise buyers. It provides the keys to evaluating how healthy the franchisor is and how robust its management decisions are. The franchisor's hired executives need to have intelligent thought and calculations behind these management and franchising issues. Spouting off business "truisms" in answer to these strategic issues will not do. After all, entrepreneurs do not want to be in the unenviable position of investing and owning a franchised unit in a brand that a few years down the road will be out of business and defunct.

Moreover, the book will help you understand where you will cross swords with your franchisors. Franchise store owner-operators may not like company competition, but franchising firms need company-owned stores. Scott shows how franchising systems that have no company-owned units are economically weaker, lack an innovative edge and are more poorly controlled. In essence, such franchisors forgo money in the future for the gain of short-term franchise fees. So it helps to know what should be a franchising firm's mix of company-owned to franchised units in your sector for return on investment maximization and financial soundness.

Interesting and sometimes controversial studies are encountered as one reads the book. For example, academic studies of the failure rates of thousands of franchisors says that franchisors have less of a chance of failing if they are located in registration states and provide franchise disclosure documents there. Franchising firms listed in famous publications as great investments do better than the others - probably not because they are really better, but because they are lifted up to stand out from the crowd.

Every potential or existing franchisee should read the book to understand how well their franchisor's executives understand and manage their business. If a franchisor executive doesn't understand the concepts in this review, it indicates a major weakness in the chain's leadership ability.

2 of 2 people found the following review helpful:

5.0 out of 5 stars Essential for anyone considering franchising their own business, April 4, 2007

By 

Gary Kowalski (San Francisco, CA) - See all my reviews
(REAL NAME)   

This review is from: From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company (Hardcover)

If you are considering franchising your own business concept, this is the best, most definitive guide I have seen on the subject. As a former franchisee and author of a book on franchises, I've experienced and read a lot on the subject. This book is well-researched, easy to read and a very thorough guide. A must read before you start selling franchises, and an interesting, helpful and very informative read if you are considering buying one to operate as a franchisee.