Long neglected by business schools, franchising is finally gaining a foothold in the world of higher ed. But will students follow?
April 20, 2018
14 min read
Ray Titus wishes he had known.
It’s not like he’s some novice. He’s the CEO of West Palm Beach-based United Franchise Group, or UFG, which owns Signarama, Fully Promoted, Transworld Business Advisors and Jon Smith Subs. Franchising is in his blood. His father founded Minuteman Press International, and taught him well. “I got my best lessons at the dinner table with my dad,” Titus says. Those lessons set him up for two straight decades of growth.
Still, that sort of education gets you only so far. When the recession hit in 2008, Titus was caught off guard. “We saw a slowdown, but we didn’t see it hitting us as hard as it did,” he says. If he’d had a more formal business education to ground him in the principles of economics, he thought, he might have taken less of a hit. But that was never available to him. No business schools offered serious coursework in franchising. Franchisors and franchisees just learned as they went — “the school of hard knocks,” as he says.
Business schools’ indifference toward franchising has long been a source of frustration within the industry. “There’s always been an attitude of Well, franchising, that’s not a real business,” says John Hayes, a veteran authority on franchising. But, of course, it is a real business. Franchisors and franchisees employ an estimated 7.9 million people and account for $713 billion worth of economic output in the United States alone — 3.6 percent of the nation’s gross domestic product — according to a PwC study conducted for the International Franchise Association.
So Titus set out to remedy the situation. In 2016, he donated $1.5 million in seed money to a local school — Palm Beach Atlantic University — to launch the Titus Center for Franchising. And when it opened this fall, the center joined a small but growing movement in classrooms across America: to properly educate the next generation’s franchise leaders.
Compared with other kinds of business schools, this movement is tiny. The only university in North America to add a major in franchising, Michigan’s Northwood University, just produced its first graduate. Palm Beach Atlantic is the first to let students declare a concentration in the subject. Several others, including Lycoming College in Pennsylvania, are launching new courses. According to an unpublished review of 300 business schools in the U.S., 16 have listed at least one course devoted to franchising since 2010, and only two courses in franchising are taught at the graduate level in the entire country.
Despite these low numbers, industry pros see positive momentum: “That’s better than it used to be,” says Denise Marie Cumberland, assistant professor of educational leadership, evaluation and organizational development at the University of Louisville, and co-author of that unpublished review.
Franchising programs still have their doubters and their challenges, but the supporters of these initiatives — many of them successful franchisors themselves — are unwavering in their belief in the power of a franchising education, both to enrich and protect would-be franchisees and franchisors. “If you don’t know what it takes to be a franchisee or to be an employee at a franchise, you’re headed for a disaster — as many people have experienced,” says Hayes.
It wasn’t an oversight that accounted for franchising never being taught in business schools. Business schools have just never seen the point: All its elements, they say — marketing, logistics, management — are taught in other classes.
“Franchise ownership or management is fundamentally no different than other forms of management leadership,” says Timothy Baldwin, chairperson of the department of management and entrepreneurship at Indiana University’s Kelley School of Business. “Sure, there are nuances of franchise relationships, but the core issues are market assessment, operational excellence, labor management, culture — all of which we do teach.”
To John Hayes, who was lured away from a cushy teaching job in Kuwait to oversee Palm Beach Atlantic’s franchise concentration, “that just shows you how little people in business schools know about franchising. It’s like saying, ‘Well, when you become a family-practice physician, you learn everything about podiatry and urology.’ No, you don’t. It’s a specialty. And franchising is a specialty.”
Experts like him are eager to tick off all the other reasons franchising is different.
For example, no other business classes talk about the relationship between franchisors and franchisees, says James Hop, chairman of the nascent franchising-management major at Northwood. “If you don’t understand that, you’re not going to be successful.”
But as these advocates are finding out, they’re having to argue these points against their own colleagues — administrators and fellow faculty who just don’t see the point of teaching franchising.
“Some of my friends who are purists don’t consider franchising to even be entrepreneurial,” says Marshall Welch III, chair of a new minor in entrepreneurship being started at Lycoming, which will next year also add a course in franchising. As far as the doubters are concerned, he says, students interested in franchising “can just take some small-business classes.”
When Hop set out to launch his franchising major at Northwood, he came up against the same problem. “We came to the conclusion that it was mostly ignored because the industry was viewed as just being McDonald’s.”
That perception problem became evident to Titus, too. After the announcement of the new Palm Beach Atlantic program, he recalls, “the first question I got asked was, ‘Why do you want to teach kids to flip hamburgers?’ It ticked me off. We’re not teaching kids to flip hamburgers. We’re teaching them how to own a franchise company, to start a franchise company. We’re looking to give every one of our students a head start on their career.”
Ultimately, the argument may be won on economics. First, of course, there’s the economics of franchising. But also, there’s the economics of college. Enrollment in higher education has been plummeting in recent years, with 2.6 million fewer students than there were in 2011. And while business schools enjoy comparatively high demand — the number of undergraduate business majors since 2011 went up by 10 percent globally, according to the Association to Advance Collegiate Schools of Business — it’s enough to give them pause. Franchising programs could also attract lucrative, full-tuition-paying international students.
“We put up our nose at contemporary business trends and practices at our folly, if not demise,” says Baldwin, who admits he’s coming around to the idea of teaching franchising as a specialty. “I’m moved to say we should at least be discussing whether or not there’s something here. I could be persuaded that it’s unique and sexy enough for our student population that they might think, I could get into that.”
Franchising does seem to tap into a millennial longing for liberation from the confines of a cubicle. “There’s a real desire to be self-employed, to be their own boss,” says Cumberland, who teaches a franchising elective to students in the University of Louisville’s MBA program.
“Among 18- to 30-year-olds, there’s not this fear of failure that my generation experienced. They’re willing to experiment,” says William Fleming Jr., Palm Beach Atlantic’s president. “Millennials and iGens and Generation Zs, they want to connect the dots, and they want to connect the dots quickly.” Franchising, Fleming says, offers independence but also some support and lower startup costs than building a company from scratch.
The response has been promising. Although it wasn’t listed in the catalog in time for registration, 17 students showed up for Palm Beach Atlantic’s first course in its franchising concentration in the fall. “So many people these days graduate with just business management majors that it doesn’t allow you to distinguish yourself,” explains one of them, Aaron Rose, a 20-year-old junior who wants to someday run a business and already has franchise ideas. “You have to have specialized skills that set you apart.”
The program is so new that the boxes in which the furniture arrived still are piled in a corner waiting to be carted off. There’s an empty exhibition case waiting for something to display. Hayes’ corner office consists of little decoration other than a pair of vintage plastic KFC cups. It overlooks a statue of Jess Moody, who founded the university as a Christian-oriented beacon of American free enterprise.
Several students who have signed up for the franchise concentration are the children of franchisees, Hayes says. Student Joe Washburn’s father owned a UPS Store. His sister worked at a Chick-fil-A, and the owner got him interested in franchising. Another student wants to franchise her father’s janitorial business. “They’re reflecting what they hear from their parents, which is either that they regret that they don’t have their own business or they do have their own business and they love that lifestyle,” Hayes says.
Like George Fakhouri. He always wanted to work for himself, like his father, who owns a gas station in Michigan. Fakhouri was drawn to franchising, he says, because “you’ve pretty much just got to follow directions. It has that feeling of, I’m opening my own business, but there’s a blueprint for me. It’s easier for college students who just graduated to get themselves established, rather than building a business from scratch.”
In December, Fakhouri, who is 23, became the first graduate of the franchising major at Northwood. He is now a management trainee at Domino’s Pizza, giving him the choice of working for the franchisor or eventually opening a franchise. “During the [job] interview, everything I learned in my program pretty much came up, whether it was terminology or what it takes to open a store,” he says. Majoring in franchising “really helped me.”
Academic programs in franchising also have the potential to help franchisors. Which is why some, like Titus, have been putting pressure on schools to create franchising programs, often sweetening their appeals with time or money.
Dunkin’ Donuts founder William Rosenberg endowed what would become the Rosenberg International Franchise Center at the University of New Hampshire’s Peter T. Paul College of Business and Economics. Former IFA chair Aziz Hashim, CEO of NRD Holdings and a multi-unit franchisee of Popeyes, Domino’s and Checkers/Rally’s Drive-In Restaurants, has endowed a chair in franchise entrepreneurship at Georgia State. And Greg Longe, COO of the Huntington Company, which owns Martinizing Dry Cleaning, Huntington Cleaners, Huntington Window Fashions and Pressed4Time, lobbied for Northwood to create its major.
For Longe’s part, he got tired of retraining new employees with management degrees who didn’t know anything about franchising, and suggested a franchising major to Northwood, where his oldest son played football and his youngest also attended. The university responded, “ ‘You know, Greg, there’s nobody doing this,’ ” he remembers, exasperated. “And I said, ‘Yes, I know that.’ ”
Longe began visiting the campus once a month to help design the new major, making the three-hour drive each way from his office near Detroit. It became a cause for him. At an IFA conference, he asked who among attendees would hire a college graduate with a franchising-management degree. Every hand went up, he says.
“The business schools are missing that,” Longe says. “If [a prospective employee] can have a major in franchising and a minor in international business management, that’s just a home run.”
So far, institutions are more likely to respond when franchisors push and pay them to, says Titus. But that’s just the way of the world. “They’re focused on what the future is for them, and I don’t blame them for that,” he says.
Getting schools to commit to teaching it is only the first hurdle for franchising to be elevated to an academic discipline. Because so few business schools are doing this, there’s a paucity of textbooks. Hop’s introductory course uses Franchising for Dummies, co-authored by late Wendy’s founder Dave Thomas. Although he doesn’t assign it to his classes, Hayes keeps a pile of copies of his own 1986 book, Franchising: The Inside Story, on a shelf in his office; among its franchising success stories: ComputerLand, which closed in 1999. He gives his students real and fictitious case studies instead of textbooks. “A publisher looks at this as How many textbooks can I sell? And there’s really not a market,” he says. Cumberland’s survey found that the most commonly used books in franchise courses were published in 2005 and 2008. “That’s getting a little dated,” she says.
Meanwhile, if business schools question the value of franchising, so do many students and their parents. “If you have 10 faculty in your business department, and nine out of 10 think franchising is a waste of time, how many kids are going to sign up?” says Welch, at Lycoming. “Because nine out of 10 of the faculty advisers are saying, ‘Don’t waste your time with that stuff.’ ”
The Farmer School of Business at Miami University cites low student demand as the reason it offers a franchising course only every two or three years. Northwood’s program has 11 franchise majors, fewer than Hop anticipated. “I’m surprised it hasn’t grown faster,” he says. “But when you’re the only one who has it, students and parents don’t know what it is. They know accounting and they know finance and they know marketing, but when you say ‘franchising,’ they kind of look at you funny, as in, Why do you need a degree for that?”
Aaron Rose knows why. Back at Palm Beach Atlantic, he has begun an internship with UFG that’s part of the requirement of the franchise concentration. Sure, Rose says, the typical perception of a franchise is fast food. “I share my passion for franchising with people and I hear back, ‘Why do you want to be a part of that? You don’t want to be flipping burgers.’ ”
He has confidence in his decision, though. These days, he says, “I find it hard to pick out a business that’s not franchised.
“People have no idea,” Rose says, “how much money there is to be made.”