What can Franchising Teach Us About Improving the WordPress Community?

At first glance Franchising and WordPress seem to be in two different worlds. They have more overlap that you'd first think.

At first glance Franchising and WordPress seem to be in two different worlds. They have more overlap that you’d first think.

WordPress gets me excited! 18 months ago I started participating in WordCamps, reading WordPress blogs and owning a WordPress Plugin development shop. Yet, I wasn’t schooled in development or tech administration; I originally got to know about WordPress in 2007 through Franchising.

More specifically, by representing Franchisors like The UPS Store, Massage Envy, Ace Hardware, CertaPro Painters, and Budget Blinds as their Integrated Marketing Agency.

Leave WordPress to Make it Better

I appreciate and agree with the point of view that Roy Sivan recently shared at WordCamp Los Angeles in 2015. You can watch the whole video below:

In short, he shared that developers should take breaks from the WordPress community, learn other coding languages, and then return to benefit the WordPress Way of getting things done.

In addition to codebases, it’s important that our community of developers, site admins, freelancers and marketing agencies move through business associations, too.

One industry you might consider learning more about and participating in is franchising.

So what is this Franchising thing anyway?

Subway is a franchise, right?

Yes, Subway is a franchise, though this post isn’t about explaining the unique business model or impact in our economy (through Franchising produces 1/7 jobs in the U.S. alone). I would encourage folks to go learn more here: franchise.org 

Here are a few things from the International Franchise Association:

What is Franchising?

“Franchising is simply a method for expanding a business and distributing goods/services through a licensing relationship. In franchising, franchisors not only specify the products and services that will be offered by the franchisees (a person or company who is granted the license to do business under the trademark and trade name by the franchisor), but also provide them with an operating system, brand and support.

Franchising is about relationships:

Many people, when they think of franchising, focus first on the law. While the law is certainly important, it is not the central thing to understand about franchising. At its core, franchising is about:

The franchisor’s brand value

  • How the franchisor supports its franchisees with training and business operations advice
  • How the franchisee meets its obligations to deliver the products and services, following the system
  • ……..and most importantly – franchising is about the relationship that the franchisor has with its franchisees.”

Again, to learn more about franchising, visit franchise.org and view their resources available to non-members.

So why does Franchising matter to WordPress?

The volunteers and businesses that operate under WordPress are similar to a“Franchisor-Franchisee” relationship.

NOTE: We are very different, too. Franchising Law and GPL are often at odds with one another.

The ways we are very much the same:

WordPress runs from a core development base. Governance is put in place to operate the code that affiliated Plugins and Theme businesses submit into the Repository. Franchisors have an Operating manual. Franchisors setup the Brand and the system. Franchisee’s hire employees, set services and execute. WordPress empowers theme and plugin developers to make pricing and product positioning decisions, independently without oversight. Franchisees are often decentralized based on price and service offerings. The cost of 12” Sub in Omaha, NE is $2 less than in San Diego, CA. Our marketplace strength together outweighs Plugin or Theme shops from “going it alone”. We win together, in fact, because of the WordPress Core. In Franchising, a Brand can have hugely positive (think Ace Hardware) and hugely negative (think Quiznos) on a local unit’s ability to succeed and generate revenue.

So, what can franchising teach us?

Franchising certainly has the capability to influence our industry and help us improve profitability and understanding of mass scalability. However, these aren’t the most important items for WordPressers to focus on.

Rather, Franchising can teach us three things, which will significantly elevate our business collective.

  1. Franchising can teach the WordPress community about data benchmarking.
  2. Franchising can teach us about the importance of participating in Washington with our publicly elected officials.
  3. Franchising can teach us about creating “buy-in” — internally and externally

1. Franchising can teach our industry about data benchmarking

I’m curious about so many things in the WordPress business, some of which are:

  • What percentage of WordPress users purchase premium products vs. use free only?
  • What is the industry conversion rate for free downloads to premium add-on purchases?
  • What is the industry average for refunds? (Ours is 5%)
  • What is an acceptable support response time? What is exceptional?
  • What is the average gross revenue of a given Plugin/Theme shop?
  • What is the current and three-year growth rate of the Plugin marketplace (Freemium and Pro)?

I commend companies like Easy Digital Downloads, which publishes its yearly stats and thoughts as they did here.

A third party or the community (maybe Advanced WP Facebook Group) should begin gathering key data sets for benchmarking and forecasting the industry.

If we band our data together, we will be able to wield more influence outside of WordPress.

FranData produces and publishes economic data for the entire Franchise industry, benchmarked across sets of sector, company, and individual operator unit revenue.

This data has a profound impact on:

  • How banks lend to Franchisors and their Franchisees.
  • How politicians in Washington view our requests and positions on policy.
  • How businesses make growth decisions tied to product and labor.
  • How the industry makes critical decisions to ensure its survival.

Performing these tasks may help better answer one of the most profound questions in Open Source: What is our industry value today? (Franchising is 3.5% of GDP) And what projected value and impact on the web will WordPress shops create three years from today?

I’ve heard from many outside of WordPress (and I’ll paraphrase) “that the WordPress business is an amateur business.” Potentially, this occurs because we are aggressively sharing Code through Git, but only “casually chatting about business numbers at WordCamps.”

Until we solve this challenge, many banks and shareholders who have interest in emerging industries will dramatically under-project the current value of the “average WordPress shop” because of our collective (or lack thereof) data.

2. Franchising can teach us about the importance of participating in Washington.

Yup, we’re going to talk about politics.

Why? Because in business, public policy matters. Though it may be a hobby for some, for our team, WordPress is a livelihood. In several ways, policies, regardless of party motive, provide an existential threat to the Open Source community.

We need to look no further than the recent debate on Net Neutrality and the role of Reddit in getting folks to pick up the phone (YES, pick up the phone!) and make calls to elected officials. A PAC was created and you can read more about it here.

And this group, likely in most ways, was directly responsible for winning the battle in Washington. Would this not have happened, your mom’s blog would have likely loaded a little slower, while folks trying to take on the shaving industry would be blocked from introducing a new razor because they couldn’t afford the increased cost of bandwidth delivery from their viral video (think AT&T price fixing bandwidth delivery based on traffic volumes).

Today, because of several large Franchisors, Franchising is facing a very existential threat in the redefinition of their business model, too.

And what has the IFA done? In a matter of several years they made it a priority to “be more involved in Washington” and prioritized their Political Action Committee to raise more funds and support Candidates who stand with small business, regardless of Party.

The result? IFA is now one of the ten biggest PAC organizations in America and has successfully stopped the catastrophic redefinition of their business model for the past few years. The fight continues.

Net Neutrality is not the first (OR LAST!!!) policy that will impact our future. The formation of a WordPress political action committee will provide the WordPress community a clear voice within Washington. It will also elevate the community as a thought leader in Open Source. Additionally, the next location for WordCamp US should be held in our Nation’s capital, elevating our PAC and  leadership role within Open Source.

As we are the industry that democratized publishing, we should also be one of the forces behind future internet policy. If we don’t, I know who’ll be there because they already are: Microsoft and Squarespace.

3. Franchising can teach us about generating “Brand buy-in.”

To understand this concept, let us consider something we’ve all done in the past few years, stay at a hotel. At that hotel, you either had or didn’t have a Music Device in your room. Likely, having that device installed in your room took a lot more than someone buying it on Amazon.

We presume the process was this:

  • Corporate market research showed that hotel guests want to play music off phones, in the room.
  • Corporate set up capital expenditure budget recos for local units (Hotels) to purchase devices and to place in their (X) rooms.
  • Each franchisee or ownership group received marketing material on “why audio devices in rooms matter and generate profit.”
  • Each franchisee received a call from a Corporate Regional Operations manager to go over about investing in devices and its potential return.
  • Franchisee’s received the costs and many didn’t budget the additional $18,000 (300 rooms @ $60 room) for the new device.
  • Lots of Mad owners!
  • Franchisor (corporate) brought in a slick Agency (think Chris Lema) to WOW them about music.
  • Finally! Franchisee’s buy in begrudgingly and are pissed about “losing $18,000 for some junk audio.”
  • Five months later, occupancy is up and profits are up because folks are tweeting about “Great sound in room,” demonstrating the effectiveness of marketplace research.
  • Franchisor generated buy-in from the franchisee based on empirical data and proper sales skills.
  • It’s a WIN-WIN.

The System Grows. More jobs are created. Government earns more taxes. Everyone is happy.

This process could have only happened with these actions:

  1. Solid Research
  2. Great internal marketing
  3. A good sales guy at the Consulting Agency
  4. Trust between franchisor and franchisee
  5. Willingness to take risk

When I consider the five points above, I believe that we should actively work together to improve on our industries “buy-in actions”. We will also have several unique actions because WordPress operates under volunteer contributors and a variety of business types.

What does WordPress have to lose?

As is currently happening, Plugin development teams like ours, WP Agencies and all of our client brands, nonprofits and organizations should continue coming together while also adopting from others.

Let’s take these steps today to ensure we continue strengthening our industry tomorrow.

Otherwise, success will continue to beg SAAS and WordPress.org may, in the future, have a serious “Brain-Drain” problem on hand.

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