Pros and Cons of the Pure-Play Franchisee E-Commerce Model

The pure-play franchisee model transfers the task of handling e-commerce operations to 
the franchisee. 

In this scenario, the franchisor grants multi-channel rights to franchisees, which operate their own transactional web stores, maintain their own local product/service catalogs, and run their own promotions. Potential challenges include online sales encroachment over other franchisees’ licensed territories, uneven customer experiences from one web store to another, and customer support difficulties.  

However, transferring investment and operational costs over to franchisees takes much of the e-commerce burden off the franchisor’s shoulders. And for a business model built around minimizing capital requirements for expansion, the “laissez-fairee-commerce approach allows the most motivated franchisees to fund online efforts and see direct results from their investments. 

To circumvent issues, this franchise e-commerce model requires making opt-in provisions in the original franchisee agreement, along with a separate e-commerce agreement containing all legal, technical and commercial specifications, including domain license, content and intellectual property rights. 

This model can be used as an incentive for franchisees to evaluate online sales performance over an initial set period before granting an exclusive “internet franchise territory.” Both franchisor and the awarded franchisee then jointly operate the successful web store.