What are some common mistakes that new franchisor start-ups make?
SS: One of them is that young franchisors don’t really understand the economics of franchising, particularly the issues that relate to conflicts between franchisors and franchisees: That the system has structural issues that mean franchisors and franchisees have different goals. There will be conflict in their franchise systems. BMM: So no matter how nice a guy the franchisor leader might think he is or wants to be, there are conflicts of interests built into the system. SS: What people [franchisor founders and leaders] do is essentially convince themselves: “Unlike everybody else in the industry, I’m a saint. Therefore, I won’t have conflict.” What they really should be saying is, “Look, there’s something that happens when a franchisor adopts strategies to try to maximize a franchise’s revenues at the outlet [to receive more royalty payments to the franchisor], while the franchisee makes money off profits, their revenues minus costs.” That means that there will be conflict. The franch
