Three ways crypto and blockchain can improve franchising for everyone
By Jonathan Almanzar, CEO and Founder of Chick‘nCone
The cryptocurrency market cap is above $2 trillion and has taken the financial industry by storm over the last few years. The trendy market is beneficial to all who are involved and is quickly finding itself being integrated into a range of other industries, across real estate, banking, and even the restaurant industry.
I have always been invested in the market, and recently implemented it into my own business, Chick ‘n Cone. I like to call my business, the technology company that sells chicken. The addition of NFTs in particular to my business proved beneficial not only for me, but all parties involved as it acts as a massive wealth transfer.
Each Chick’nCoin represents a geographical area and with the purchase of the token, the owner is given the right to receive 50 percent of the initial franchise fee of every Chick’nCone restaurant that is opened in that geographical area, as well as 2 percent of the sales within that area, over the next six years. The initial franchise fee for a Chick’nCone restaurant is $45,000. Typically, there is a potential for each area to have three to five franchises.
If the area secured by the NFT already has operating restaurants, the owner begins earning 2 percent of sales, on a monthly basis. Minting a Chick’nCoin costs 3.5 ETH, and provides the buyer with a random area. The cost is $19,500 for those who want to choose the region with which their token is associated.
This is just one of many ways cryptocurrency and blockchain technology can improve quality of life and here is a more specific breakdown on how it can benefit people in the franchising industry specifically.
For the Franchisee
Franchising has traditionally grown on the promise that the average person can become a business owner by joining an existing business that provides a blueprint for success. The problem, however, is that this isn’t a reality.
What franchising actually does is provide opportunities for people with a significant amount of money in their savings account to buy into a revenue-generating business to increase their net worth and potentially grow their retirement account.
The people being given the opportunity aren’t actually the people who can best take advantage of the opportunity. They aren’t the people that are actually skilled at pouring their heart and soul into a business and making it their own.
They aren’t necessarily the person who understands the industry inside and out and have been intimately involved in said industry for 10 years, and all they need to run a great business is a chance. So how can crypto create a path to providing opportunity to those who can truly shine? That’s kind of the ethos of the blockchain, removing the power of the privileged and creating a meritocracy.
But how would we do this in franchising? By connecting finances to the proper and most skilled operators through DAO’s and other funding mechanisms. Franchising could truly offer a chance to own your own business to the skilled who don’t have the bank roll and even those with the smallest amount of expendable income to be a part of making it happen and opening up a franchise location.
For the Franchisor
Paperwork. So much paperwork as a franchisor. Franchisor’s have oversight provided by the SEC and are supposed to be transparent companies that allow potential franchisee’s the ability to see what is going on within the company.
In reality there is room for a lot of ambiguity within a franchising network. Some of it is due to disorganization, some due to lack of manpower and some due to the information just being difficult to find.
But something as simple as moving franchise agreements to the blockchain and making them NFT’s stored in a marketplace easily accessible and readable, with proper expirations and renewals. Add to that the FDD, traceable when accessed would remove a lot of pain and time in the approval process.
Audited financials clearly visible and accessible would be another huge benefit of moving the contracts and declarations for a franchise to an NFT platform. A second benefit to franchisors would be crypto as a form of payment.
As crypto becomes a more accepted form of payment, franchisors will be able to process transactional royalties rather than weekly or monthly. But with every purchase the currency can be divided immediately into its segments, royalties, taxes, marketing, and net sales.
Also franchisors could create their own ecosystem of crypto currency, thereby capturing currency spent and keeping it within their franchisees. Selling it at a discount compared to fiat, but then ensuring it would be spent within their stores and services.
For the Consumer
Once crypto is readily accepted at franchise locations and we offer more secure, more convenient forms of payment, creativity can be used in connecting the consumer to the brand. The ability to have a vote in limited time offerings, new locations, items to keep on the menu or bring back, could all be run via the blockchain technology and Web 3.0.
Even some form of the old McDonald’s Monopoly game of earning and collecting digitized assets with digitized and real world rewards. Also, being able to earn, purchase or be gifted an NFT reward club- where promotions, coupons, giveaways are airdropped directly to your wallet for a more permissible and tailored marketing experience.
When franchises begin accepting cryptocurrency consumers will also be able to avoid fees that often come with using a credit card or with currency exchanges if you’re in another country. Crypto remains the same no matter where you are purchasing from. Making a purchase with crypto saves money and eases unnecessary worry of paying more for something other than the price stated.
The integration of cryptocurrency would result in consumers being more satisfied with their purchases due to their contribution in the decision making process. This tailored experience would lead to the reduction of bad consumer experiences, which would ultimately create a more consistent positive experience.
Crypto is the future of a myriad of industries and should be embraced by all due to its undeniable incentives. Very rarely do all participants of a business reap the rewards of change and new practices which makes the integration of crypto that much more exciting. The current status of the crypto trend is only growing so it is better to get ahead of the curve than behind it.