Books / PDFs regarding franchise-based businesses?

[GrizzlyRock]

Hey guys I am working on a project to better understand / invest in franchise-based businesses. Not franchise like a large moat (e.g. Coke) - franchise like 99% of Dunkin Donuts locations are owned by franchises.  And not a book on selecting a franchise to open as a job - rather optimal focus points of PE firms and/or we value investors wrt public businesses.

 

I'm looking for any material you may have around - focus on case studies, academic analysis, and any longer form material. (Don't think any books exist on the subject).  Perhaps someone has an old MBA case or two?

 

Thanks

-Grizzly

 

 

[Eric50]

I read Mc Donald's: behind the arches from John Love about 20 years ago (http://www.amazon.com/McDonalds-Behind-John-F-Love/dp/0553347594#). It's a very good read on entrepreneurship and the world of franchisers/franchisees. It tells the story of Ray Kroc and how he built Mc Donald's.

 

I lost the book in a move-in, but I remember a couple of key lessons:

 

- Mc Donald's struggled at the beginning as it charged its franchisees much less than what was then the practice. MCO had to reach a certain size before they became profitable. The first franchisees quickly made a lot of money while MCO was struggling. But it paid off in the long term as it attracted a much higher quality of franchisees;

 

- They own a lot of land. Actually the first CFO thought the company was in the real estate business. I view that as downside protection;

 

- From early on, they had a relentless CEO (Turner) who was critical in developing a disciplined cookie-cutter approach. Kroc was more the guardian of values.

 

This is probably a very good introduction to the world of franchises.

 

Eric

[oddballstocks]

I'm guessing you're looking at industry dynamics and such?

 

Here's what I'd do, I'd request information about being a franchisee from as many franchisors as possible.  Read through all the material and compare it, then correlate that back to parent company financials.

[tombgrt]

I read Mc Donald's: behind the arches from John Love about 20 years ago (http://www.amazon.com/McDonalds-Behind-John-F-Love/dp/0553347594#). It's a very good read on entrepreneurship and the world of franchisers/franchisees. It tells the story of Ray Kroc and how he built Mc Donald's.

 

I lost the book in a move-in, but I remember a couple of key lessons:

 

- Mc Donald's struggled at the beginning as it charged its franchisees much less than what was then the practice. MCO had to reach a certain size before they became profitable. The first franchisees quickly made a lot of money while MCO was struggling. But it paid off in the long term as it attracted a much higher quality of franchisees;

 

- They own a lot of land. Actually the first CFO thought the company was in the real estate business. I view that as downside protection;

 

- From early on, they had a relentless CEO (Turner) who was critical in developing a disciplined cookie-cutter approach. Kroc was more the guardian of values.

 

This is probably a very good introduction to the world of franchises.

 

Eric

 

I would add Grinding it out by ray kroc himself. You read it in a day. Maybe the e-myth revisited (or revised?) as well but pretty basic.

[bookie71]

You might check with the local SBA as years ago they had some fairly good pamphlets.