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36
STRATEGY

Franchising Franchising

Introducing the first postmodern business model.
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Franchises tend to pop up in hot industries, and given that franchising is a $1.5 trillion business itself, franchising franchising seems, in retrospect, inevitable.

A group of entrepreneurs based in Plano, Texas, recently launched Franchising Ventures Group, which seeks out profitable companies that have a franchisable concept. With a $10 million war chest and advisers that include the former CEO of CompUSA, FVG acquires franchise rights from founders, markets and sells licenses, and lends franchisees operating support. The founders get more than 10% of the royalties. "There's no risk for the company whose model we're replicating," says FVG president Steve Bergenholtz.

Already FVG is causing murmurs in the franchising world. "I've never heard of anything like that," says Jim Amos, chairman emeritus of Mail Boxes Etc. who now runs laser hair-removal franchiser Sona Med Spa. "If they have deep enough pockets, financially, to do multiple deals and deep enough operating strength, I think they could help a fair number of folks." So far, FVG is working on deals to franchise a factoring company and a direct-marketing firm. Of course, the perennial knock against franchising -- that it repels the best entrepreneurs -- may be amplified by this model. Selling the right to franchise your business, warns Steve Hockett, of Eden Prairie, Minn., consulting firm FranChoice, is "selling your future."

Last updated: Jun 1, 2005




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