Are Franchisees Entrepreneurs?

People in the franchise industry seem to be on one side or the other regarding the question of whether or not franchisees are entrepreneurs. This is actually an important question because it factors into how franchisees are recruited and selected. Franchisors have puzzled over the ideal owners to represent their brands in new markets and establishing a prototype from which franchise recruiting is based.  When you look at desirable attributes in franchisee candidates, some of these characteristics fall under the entrepreneur personality type and others are in direct opposition.

 Franchisees are Entrepreneurs

 Paul Brown wrote a piece for Forbes a few years ago arguing that franchisees are by definition, entrepreneurs. Brown’s assertion is simple, entrepreneurs by definition organize and manage business enterprises with considerable initiative and risk. It’s hard to find a franchisee who does not feel that they are incurring sizable risk and managing their franchise as a business enterprise. Entrepreneurs are extremely risk averse and work hard to mitigate the accepted risk of their ventures. Franchisees use the acquired wisdom of others, in this case the parent company, to help minimize risk as well. And though they did not create a model, they are essentially creating one in a market where that model did not previously exist.

 Franchisees are Not Entrepreneurs

Franchise consultant Joel Libava plays devil’s advocate on this one and is unequivocal in his stance. Libava makes a good point that by nature, classic entrepreneurs create models and dislike following someone else’s rules. He illustrates his point well.

I say that franchisees are not entrepreneurs. The person who came up with the concept, and invented the franchise system for that concept is the entrepreneur. Pure entrepreneurship is much different than being a franchisee. A true entrepreneur would get nauseous when during training, a 300-page franchise operations manual was slapped on his or her desk. (Those operations manuals don’t leave too much room for innovating).

Libava poses the question to his readers in his blog and I think I can answer it for him.

 Diplomatic but Right

 The correct answer to this question starts with my belief that this is a false set of choices. People do not easily fall into one category or another and we do harm to entrepreneurship in general by categorizing people as one or the other.  The suggestion that you are either a leader or a follower is intellectually lazy.  Perhaps we should look more closely at successful versus unsuccessful in a role, whether it’s a business founder or a decision-maker within that business. Success in the business world does not necessarily guarantee success in business ownership any more that restlessness and innovation translate into successful entrepreneurial endeavors. I know a lot of people who “can’t work for a boss” that also can’t and should not start businesses, and for many of the same reasons. There are attributes that are better predictors of success. Demonstrated work ethic, creativity, magnanimity and the ability to work with diverse personalities. I know entrepreneurs that have these qualities and C-Level executives that do as well. These people tend to realize success in their respective roles.  To simplify people as one or the other creates a damaging mental obstacle when selecting franchisees.