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Is it Right to Compete with Your Fellow Franchisee?

Entrepreneurs and business owners are fierce competitors. Franchisees, too, are great competitors. As a franchisee, should you take on your fellow franchisees?

Franchise competition

Franchise competition

I have said numerous times that franchising is about relationship. Along with your franchisor and fellow franchisees, you build the same brand, in such a way that if one franchisee sucks, the others will feel the impact, too. On the other hands, if you have a great team work with the other franchisees, your franchise prospers.

However, each and every franchisee has his/her own vision of what his/her franchise units will become. To achieve this vision, you need to take on competitors, whether you like it or not (if you don’t like competition, don’t start a business or buy a franchise!)

The question of the hour: Is it wise to take on your fellow franchisees with the same brand name?

By nature, franchising encourages partnership… and competition

In some cases, you can partner with your fellow franchisees in nearby operational area to develop marketing or other type of campaigns. The campaigns are, of course, yet to be approved by the franchisor.

The franchise company I was in is actually having such informal groups of 3 to 4 franchisees that work together to promote their franchise units, targeting the bigger local market than if they do it by themselves. The results, by all means, are fantastic. Sales went up and brand awareness is well enhanced.

Unfortunately, for every good thing there is a bad thing.

Not only partnership and team working, franchisees can compete among each other, especially those who have the same target market with some gray areas in exclusive area of operations.

But first things first – Is that allowed? Depending on the franchise agreement you signed, franchisors are usually retaining the rights to allow a nearby franchise unit to open if they feel the area has a lot of potential.

Another case study – One of my franchise units was established near my franchisor’s own unit. While some said that my decision was somewhat questionable, I reap the benefit of the brand awareness in the area my franchise unit serves.

Unfortunately, through the years, we have grown into something that is a love-hate relationship. I enjoy working with my franchisor, but our franchise units are competing with each other trying to secure our own piece of the market. The level of competition has gotten into my store’s employees, in a way that my staffs are up against the own unit’s staffs.

On the positive side, I don’t have to work hard to motivate my staffs – Competition does them and the store well 🙂

On the negative side, the own unit’s store manager is also taking on me – Something I don’t want to position myself in.

To cut long story short, we continue our little competition for about 3 years, before I decided to call it quit due to the pressure of recession. The own unit is thriving, so I guess they won, I lost 😀

Back to the all-important question…

Is it right to compete with your fellow franchisee?

My answer: Yes, as long as both of you keep your professionalism, and keep the competition positive. If you and the franchisees you compete with are starting to ‘kill’ each other, I think you should stop and discuss the matters with your franchisor for an intervention.

A right dose of competition does good for your franchise units (and your competitors franchise units.) Excessive competition will damage your franchise units and the whole brand name could tumble because of a negative competition among franchisees.

What is your view on this? Please share yours by commenting to this article.

Ivan Widjaya
Competitive franchise business
Image by Team Traveller.

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