Franchising is a widely understood model for retail food businesses. Many of the oldest and most successful retail food businesses in the world are franchises: McDonald’s, Subway, etc.
Newer retail food businesses such as Chipotle and Starbucks never adopted the franchise model. I can’t prove it, but I think was possible because of the Internet. Before the Internet, it was too hard to centrally plan, open, and manage thousands of stores across the world given local nuances and idiosyncrasies. The Internet changed everything. Centrally managed companies used Google Maps, richer retail and real estate data, more granular demographic data, and a plethora of other tools to efficiently plan and grow their retail businesses across many cities.
This is exactly why Internet companies don’t franchise: they use data from the Internet to determine go-to-market strategies, manage customer acquisition funnels, and refine their products.Read More