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Squidoo is a franchise that charges 50% royalties

messel by messel

What's the deal?

Now before you go all squidoo otaku and freak out, you should know up front I'm a big fan of the squidoo model (hint, this is a lens) and want to see it get more press and media love. Ideally I'd be stoked to build a similar system model, using user generated content that shares wealth with the content developers. I don't see YouTube sharing page hits with movie makers, but that hasn't stopped people from posting movies, leading me to believe there's got to be more to this "community building magic".

Here's what squidoo offers:

  • web hosting

  • lens building tools

  • a community, network access, and SquidU forums

  • negotiated affiliate rates

  • no upfront franchise fees



What they ask for is 50% of whatever you make off of their affiliate links (well they ask for 45% but donate an additional 5% to charity).

Victus Spiritus (my blog)

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What's a franchise?

We are surrounded by franchises, from McDonalds to 7-11 and Dunkin Donuts. All of these stores allow franchise investment/ownership (although some are corporate run stores).

The legal definition for a franchise is given in Franchise Law. According to Dictionary.com, the most commonly accepted business definition for Franchise is "the right or license granted by a company to an individual or group to market its products or services in a specific territory".

The franchise business model allows the individual investor to fund the growth of the business, while sharing profits directly with the investor. Varied levels of support are provide by the Franchisor (the parent company), but many tasks such as hiring, firing, financial accounting, and day to day operations are pushed out to the franchisee (the people who buy in to the franchise). So in addition to the initial investment of building a storefront, the investor is also responsible for managing the business (or hiring a manager(s)).

Don Daszkowski has some excellent information what is a franchise? to help better understand the business model.

How Squidoo is a franchise

Squidoo.com asks for an initial investment of your time, so that you may familiarize yourself with the systems and tools. If you're lenses are successful at getting a large number of focused hits, your affiliate links may be pursued allowing both squidoo and yourself to profit. In addition simply by joining the squidoo system you are strengthening it's brand. Your friends and associates will see what are you developing on squidoo and recognize it as a growing web community.

Resources to help with franchise finding

There is a growing space of web and company support to aid in matching the right franchisor to a proper franchisee candidate. Entrepreneur magazine has a yearly list of it's highest rated franchises, Entrepreneur.com 29th annual franchise 500.

Business Coaching vs. Franchise Headhunters

I would advise some caution when approached by any business that wants to "help you" find a good business fit. These companies are paid like headhunters and get a fee from the Franchiser when you sign on. They are highly motivated to get you to become a franchisee, even if it's not in your best interest.

Business Coaching on the other hand has a variety of awesome "you friendly" applications. A business coach can act as a mentor when an entrepreneur is first starting out and unsure of how best to design his business model. They can also help refine your first product concept to better grab a critical market share.

A business coach can help with an existing business

  • defining problem clients

  • identifying bottlenecks to execution

  • helping identify business aspects that are ripe for change not just to improve profits but to improve the business owners happiness

  • helping you explore new market space

  • by getting your brand out there with more focused marketing concepts

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My dream franchisor (my own of course)

My ideal Franchise:

  1. upfront initial costs minimal, fifty bucks tops (software package with all the goodies)

  2. simple system that anyone can get their head around, needs to be customizable to allow individual franchisee creativity and to have successful techniques feed back up to the franchisor (dynamic feedback network refinement)

  3. fun concept from start to finish: shiny, new, hotness, kid to baby boomer friendly

  4. low royalty fee -> target 4% total includes marketing

  5. most powerful marketing word of mouth, magazine/news articles

  6. web based, anyone can own a franchise from home!

  7. successful system: I develop the first prototype work out the kinks and document the entire process then test the process and refine it scientifically with an initial focus group of interested people, offer incentive as "guinea pigs" make their franchise royalty fee 3% for 1 year



(thanks to Patrick Smith for this breath taking photo)

Entrepreneurship vs. Franchise

A Franchisee is an individual investor who takes an existing business system, and excecutes in order to maximize their profit. While an Entrepreneur may also start a small prototype business, the long term focus of the Entrepreneur is to grow their new business and create their own brand, or to apply their existing brand to new markets.

Deciding which business model better suits you as an individual is the key to moving forward down a successful and profitable path. Would you be better suited to developing a franchise, and executing within a given system, or would you prefer the greater risks and creative solution business of Entrepreneurship?

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You can take it with you ;)

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Reader Feedback

  • DaveBrown Sep 15, 2010 @ 2:01 pm | delete
    When you own or start a franchise business, you're in business for yourself, but not by yourself. And when you use FranchiseExpo.com, you're setting yourself up for a franchise opportunity at http://www.franchiseexpo.com/.
  • Snozzle Apr 16, 2009 @ 11:43 am | delete
    An interesting lens, though I find it difficult to see Squidoo as a franchise. I guess the way to overcome the 50% royalty is to go independent and blog instead. Food for thought!
    Mike.
  • messel Apr 5, 2009 @ 2:14 pm | in reply to CCGAL and rydigga | delete
    Glad both of you enjoyed the info. Whenever I feel the itch to share something I come across I usually blog it, and/or squidoo lens it.
  • CCGAL Apr 4, 2009 @ 4:01 pm | delete
    I thought this was a very interesting take on Squidoo. I had never thought of it as a franchise opportunity, but you made some valid points.
  • rydigga Apr 3, 2009 @ 10:32 am | delete
    Hi Mark,

    Excellent lens. I learned quite a bit about franchising today :)

    Ryan
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messel

Howdy, Victus Spiritus is my default soapbox and communication hub, please stop by and say hi.
I'm Mark Essel a long time systems engineer gone web author/entrepreneur.... more »

Deluxe. Remarkable. Creative. Unusual. Successful. Upmarket businesses push the envelope -- does yours?

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