THE 10 MOST MEANINGFUL COMPETITIVE ADVANTAGES TO BEING A FRANCHISEE

By Gerhard van Wyk

A sustainable competitive advantage creates the basis for superior performance and the long-term survival of an organisation in the marketplace, as well as delivering value to the customer. It is important that franchises understand the various ways in which a competitive advantage can be structured. Jooste et al, (2009) and Gilligan et al, (2009) listed the ten, most meaningful, competitive advantages an organisation / franchise must focus on.

• A superior product benefit

National Panasonic developed a range of electronic equipment perceived as superior products in the market and are now considered the benchmark against which competitive products in these categories are measured.

• A perceived advantage or superiority

Camel cigarettes, with their aggressively masculine image of the “Camel Man”, were able to sell their product at a premium in South Africa. This advantage was lost when legislation with regards to cigarette advertising in South Africa changed, however the same perceived advantage or superiority could be drawn to other product categories.

• Low-cost operations

Low overheads, limited product range, low cost distribution and high productivity are factors that could deliver such an advantage.

• Legal advantage

Legal advantages are achieved through patents, exclusive distribution channels, copyright or government protection such as tariff and trade restrictions to protect the activities of the business.

• Global experience, skills, coverage and training

McDonald’s Restaurants is a global brand that has learnt to adapt its products to the local cultures in each market it penetrates. Many large companies offer specialized training, either free or at cost, empowering franchisees to run their business better. McDonald’s runs its own academy where new franchisees learn how to avoid common pitfalls and maximize their return on investment. Drawing on the experiences of their many franchisees across the globe, they share this vital knowledge with new franchisees.  

• Superior contracts and relationships

Building superior relationships with customers, government or suppliers can lead to privileged access to important stakeholders with ensuing competitive advantages.

• Superior competencies

Superior competencies require that organisations be responsive to the unique and rapidly changing needs of customers. This can be achieved through further market research, superior information systems and employing the best technical personnel. In Business @ the Speed of Thought (Warner, 1999), Bill Gates writes: “The most meaningful way to differentiate your company from your competition, the best way to put distance between you and the crowd, is to do an outstanding job with information. How you gather, manage, and use information will determine whether you win or lose.”

• Scale advantages

The cost per unit of manufactured products for example can be reduced by long production runs.

• Offensive attitudes

The will to win and competitive toughness in cut-throat markets can be considered under this heading.

• Superior assets

Here we consider physical assets such as the latest machinery and intangible assets such as advertising and overheads. A South African example is the petroleum manufacturer SASOL, who has a superior asset advantage in the form of direct access to coal from its mines used in the petroleum making process.

Customers, or would-be customers, must be informed and reminded of the value-add an organisation offers, the extras that save them money, time and aggravation. Yet too many business owners and managers are ignorant of exactly what those competitive advantages are. It is possible that organisations are providing a lot of “extras” without realizing their true impact. Organizations not providing meaningful extras might consider adopting them, considering the critical competitive advantages to be gained (www.tlainc.com/ articl39.htm)Gekas - Soortgelyk.

Dr Gerhard van Wyk’s area of expertise relates to Marketing and Sales Management with specific focus on Business to Business marketing and Franchising. Gerhard’s working experience exceeds twenty years in the petrochemical and chemical sectors. He is involved in the identification of growth opportunities and the development of marketing and sales strategies to unlock sustainable wealth. Gerhard is also an accomplished author of several academic and other articles on marketing, B2B and franchising.