Business format franchising is the wrong channel for pot

Look, whether the businesses will run afoul of the federal government is one issue. But even if the government allows pot retailing to flourish, there is a more fundamental business problem. Business format franchising is the wrong channel for pot.

Which franchising consultant sold this poor soul on this?

What the product is begging for above anything else is a manufacturing process that is uniform like Coke or Ford. A brand is not a Marijuana strain like Maui Wowie. Rather, think BAT with its KENT brand or Philip Morris with its Marlboro brand. After that, the producer will possibly need regional packagers through a product-distribution franchise that eventually helps develop and deliver the goods to additional channels as they open up-- e.g. convenience stores, supermarkets, etc.

Getting into the business of controlling how a shop owner paints and cleans the store, how the bins are organized and how staff interact with the consumer is the least of this budding industry's issues.

One of America's, Britain's and Australia's earliest franchises were bars. In America, that was before Prohibition. Bars were often licensed by large distillers as product distribution franchises in communities to distribute their "sin" goods to consumers. They also developed regional bottlers as product distribution franchises. There's a reason why beer and liquor producers developed and then later developed product distribution franchising as a channel to use and not business format franchising. Bars never really became business format franchises.

Business format franchising is the wrong distribution channel at the wrong stage for this budding industry with high cash flows. Unfortunately, this pie-in-the-sky would-be franchisor has been duped.

mofuse.com