Startups Stack Exchange Archive

Should a franchise use products readily available to the competition?

Say a startup food company is planning to sell hot wings (AKA chicken wings) and hopes to franchise itself in the future. As sauces are a key offering of a hot wings business, should the business develop its own sauce recipes? Or can it rely on using a product that’s readily available to the public (e.g. Franks sauce)?

Some issues to consider:

  1. It may be possible to develop sauce recipes that end up being cheaper than what’s commercially available.
  2. Using a commercially available product means the customers are already familiar with the sauce – and may prefer it over the in-house sauce.
  3. Franchisees may not see the value in franchising a business that relies on a sauce they can just buy themselves.
  4. Having BOTH commercially available sauces AND in-house developed sauces is an option to consider.

Any thoughts on the matter is highly appreciated.

Answer 13285

Franchising is so much more than just providing “secret sauce”. Franchisors most important selling point is proven business model and providing franchisees with access to marketing, administrative and other resources.

In this context, as long as the product is good and clients approve, whether or not the ingredient is sourced in-house or bought ready made does not bear much relevance.

Where it bears relevance though is marketing and your product offering - having something good developed in-house is clearly superior than utilizing something ready made - both from marketing point of view and offering point of view. I would recommend trying both - commercially available and if resources allow, develop your own.

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