What Is Nano-Franchising?

Definition of Nano-Franchising

Nano-Franchising is a unique subset of franchising where the technician, who carries out the work, is always the business owner fostering a level of commitment & dedication that can’t be replicated in any other work arrangement. As a consequence, they’re highly motivated to consistently provide dependable, quality & guarantee backed services because nobody cares like an owner!

Nano-Franchises are, by design, very small with the technician-owner representing a singular franchise unit, aptly named a Nano-Franchise, and scaling is capped at two on-site assistants per Nano-Franchisee.

Compared to traditional franchising, the Nano-Franchisee receives significantly enhanced support services that offload almost all administrative burdens to the Franchisor thus empowering them to better focus on the provision of their specific services while ensuring Customer support is world-class.

Origin of Nano-Franchising

Nano-Franchising was originally conceptualized and developed by Canadian entrepreneur Mark Baker of Motivated Brands Inc. The primary motivation behind this innovative business model was to address the significantly high technician turnover rate that beset the residential house cleaning industry.

He believed it was the root cause of the industry’s prevalent operational chaos and customer dissatisfaction so he tirelessly dedicated several years testing various iterations of his business model with the aim of uncovering the root cause and fixing it.

Eventually, he reflected on his early days starting out as a solo Professional House Cleaner in St. John’s, Newfoundland. He introspectively pondered, ‘What is it, specifically, about me that makes me care so deeply about my work?’ The epiphany was both simple and profound: He concluded that his deep care for his work stemmed from it being ‘his’ business and, ultimately, nobody cared like an owner!

Recognizing that the commitment and dedication inherent in ownership could not be replicated in any other work arrangement, and with the phrase that would later become his company’s slogan, ‘Nobody Cares Like an Owner,’ resonating in his mind, he embarked on the journey to conceptualize and develop Nano-Franchising. The solution was now crystal clear: transform each technician into the owner of their own very small business.

What Is Business Format Franchising?

Business format franchising, the most common type, is a business model that grants an individual, the Franchisee, the right to operate using the brand name, trademark and operational systems of another business, known as the Franchisor.

The Franchisee pays the Franchisor an initial franchise fee along with ongoing royalties, typically a percentage of gross sales, for the continued use of the franchisor’s brand name, identity, operational systems, initial and ongoing training, ongoing support services plus other benefits.

The foundation of franchising is built on the symbiotic relationship between the Franchisor and Franchisee with both parties working collaboratively to enhance and maintain the brand’s reputation, which is both parties most valuable asset.

The Franchisee runs the day-to-day operations of the franchise unit adhering to the Franchisor’s processes, policies, guidelines and best practices. Upholding the brand’s standards is vital to ensure the consistent delivery of predictably favorable services to Consumers as they trust and choose a franchise based on the brand’s reputation.

Nano-Franchising Is A Unique Subset of Franchising

Having established a comprehensive definition of Nano-Franchising, explored its origin and understood the fundamentals of traditional business format franchising, we now delve deeper into the elements that make Nano-Franchising a unique and innovative subset within the broader franchising landscape, such as:

  • The technician, who carries out the work, is always the business owner.
  • An owner-level of care translates to unmatched commitment and dedication.
  • The technician-owner consistently provides dependable service & quality workmanship.
  • Each technician-owner is a singular franchise unit.
  • Scaling is capped at two on-site assistants per Nano-Franchise operator.
  • Nano-Franchisees receive significantly enhanced support services.
  • Most administrative burdens are offloaded from the Nano-Franchisee.
  • Nano-franchising ensures the delivery of world-class customer support.

In the following sections we’ll examine its distinguishing features in detail, illustrating how Nano-Franchising introduces an innovative approach to the business format franchising model.

The Technician Is Always The Business Owner

In traditional franchising, the franchisee brings an owner-level of care but this model typically depends on hired technicians for the on-site work creating a  gap which dilutes that owner-level of care. Nano-Franchising bridges this gap because the cornerstone of the Nano-Franchise model is that the individual carrying out the work is always the business owner too.

When technicians are their own bosses it creates a level of dedication and commitment that can’t be replicated in any other work arrangement. As a consequence they’re highly motivated to consistently provide dependable, quality & guarantee backed services because  nobody cares like an owner! Here are just some of reasons owners care more:

Endowment Effect: Highlighted by Richard Thaler, the endowment effect is a cognitive phenomenon in behavioral economics. It reveals that people generally care more about  things they own more than things they don’t, primarily due to an instinctual, deep-seated aversion to loss.

Financial: Owners receive 100% of the revenue, less a marginal franchise royalty,  allowing them to earn a true living wage, get off the proverbial hamster wheel and advance their personal and family lives. 

Personal Investment: Owners take a personal risk, make personal sacrifices and commit their own personal resources into their businesses. This direct investment of money, time and effort creates a heightened stake in the outcome. Naturally, with their resources on the line, they are motivated to pay attention to the details with a focus on Customer satisfaction and quality workmanship to ensure their venture’s success.

Direct Consequences: Franchisee-owned units outperform locations managed by employees because the franchisee-owner faces the consequences of their performance differently. Every decision carries a personal repercussion; if their business thrives, they reap the rewards, and if it struggles, they bear the brunt of that failure, fostering heightened responsibility.

Identity: Owners personal and business identity becomes intertwined with the reputation of their business becoming tied to their personal reputation. This connection creates an inherent drive to uphold high standards to  maintain a positive image and safeguard their reputation.

Autonomy and Control: Owners care more because, unlike traditional employment scenarios, they are  endowed with the freedom to make decisions in key areas that directly impact their work and personal lives such as the areas they service to when they take a  vacation, to name just two.

Emotional Attachment: Owners form a deep emotional connection with their businesses, which can symbolize their dreams, aspirations and the fruition of their hard work. This connection causes them to care more than if  it was simply just a means of income.

Long-Term Vision: Owners, driven by their personal investment, adopt a long-term perspective, prioritizing lasting success over immediate gains. This commitment necessitates a consistent focus on dependability and the delivery of quality workmanship.

What is a Nano-Business?

A Nano-Business is a subcategory of small business including entities with 1 to 4 people and annual sales revenue up to $250,000. This category was introduced by Mark Baker to refine the traditional small business classification system used by the Government of Canada and its agencies like Statistics Canada, Canada Revenue Agency and Innovation, Science and Economic Development Canada.

These agencies categorize businesses to better analyze, manage and support various aspects of the economy. This helps in making more informed decisions amongst government bodies and private sector stakeholders.

Traditionally, these agencies have classified businesses based on the number of paid employees and annual sales revenue into three categories:

Small Business:1 – 99 paid employees$30,000 – $5,000,000 revenue.
Medium Business:100 – 499 paid employees$5,000,001 – $20,000,000 revenue.
Large Business:500+ paid employeesover $20,000,001 revenue.

Recently government agencies introduced a new sub-category called a micro-enterprise in an attempt to better classify the small business category but it is not adequate as it simply describes a business with 1 to 4 paid employees. Outside of overlooking  sales revenue, it doesn’t effectively segment the small business sector, unfortunately.

This governmental classification of small businesses is too broad, failing to account for the vast differences between various small businesses. For example, a solo house cleaner making $55,000 a year, a 4-person operation earning $300,000 and a 98-technician business generating $4.5 million annually are significantly different and need to be placed in sub-categories within the small business category. 

These differences present challenges for both government agencies and the private sector in providing tailored support services, policies and products that effectively meet the diverse needs of businesses classified as small. Additionally, the existing terminology can result in misunderstandings or incorrect assumptions when business owners communicate the nature of their operations to others

To resolve this, Baker redefined the small business category with sub-categories, introducing ‘Nano-Business’ and shifting the terminology from ‘paid employees’ to ‘people’ to better reflect today’s complex work relationships. He also integrated annual sales revenue into these classifications:

Nano-Business:1 – 4 people$1 – $250,000 revenue
Micro-Business:6 – 10 people$250,001 – $1,000,000 revenue
Small Business:11 – 99 people$1,000,001 – $5,000,000 revenue
Medium Business:100 – 499 people$5,000,001 – $20,000,000 revenue
Large Business:500+ people$20,000,001+ revenue

Nano-Franchises Are, By Design, Very Small

While conceptualizing the nano-franchise model, Baker’s firm vision was to intentionally keep it very small. Of the several reasons for this deliberate smallness, the most vital was to adhere to the cornerstone of nano-franchising: ensuring the nano-business owner is always the one personally doing the work.

Acknowledging the need for a small degree of  scalability, Nano-Franchising permits up to two extra team members, provided the nano-franchisee is the one carrying out the work, with the additional members working as on-site assistants. This intentional design brings forth a multitude of advantages for all parties such as: 

Owner Level Of Care: The owner level of care is never diluted because the Nano-Franchisee always carries out the work with the assistants always under direct supervision on the  same site and are never doing jobs on the nano-franchisee’s behalf on different sites.

Simplified Management: With a small team, management remains straightforward, complexities are reduced and the Nano-Franchisee can better enjoy their work life.

Work-Life Balance: The manageable size helps prevent the nano-franchisee from being overwhelmed by providing a better work-life balance.

Reduced Stress: Void of a culture that pushes for expansion the nano-franchisee experiences less stress.

Cost-Effectiveness: Operating with a smaller team reduces the amount of cash flow needed to run the nano-business.

Accessibility: The intentionally small size lowers start up costs making it accessible to more people.

Technician Appeal:  The model offers technicians who would not normally envision themselves as business owners a simplified and palatable pathway.

Retained Expertise: The owner-technician retains the institutional knowledge and grows expertise even as assistants turnover, ensuring consistent workmanship quality. This contrasts with traditional models where expertise, imparted to employee-technicians, must be reestablished with each turnover.

Valuing Customers: With a deliberately small scale, every customer relationship is highly valued unlike larger businesses where individual customer value can be diluted. Nano-franchisees cherish and nurture each customer relationship.

Valuing Customers:  With a deliberately small scale each customer relationship holds greater significance compared to larger businesses.

Significantly Enhanced Support Services

In Michael Gerber’s best seller, “The E-Myth Revisited,” he says most small businesses are started by technicians who mistakenly believe that knowing how to do the technical work of a business means they understand how to successfully run a business that does that technical work, which is not true. He states that this “Fatal Assumption” is the root cause of most small business failures.

He identifies three personas essential to a business’s success: the Entrepreneur who dreams and strategizes, the Manager who organizes and directs daily operations, and the Technician who carries out the actual technical service. Typically, the technician turned business owner lacks the critically important skills of the entrepreneur and manager, becomes engrossed in the technical work and is neglectful of the other roles.

Invariably, as their work starts to pay off, they begin to grow and things start to get chaotic for the technician-turned-business owner. Initially, they cope by simply working more hours in an attempt to juggle all three roles and the heavy workload.

However, this balancing act becomes unsustainable and, eventually, a tipping point is reached. Things really start to unravel: work quality deteriorates, customer service weakens and the business’s reputation, which the technician-owner invested so much to build, begins to suffer. 

This cycle turns the business, meant to enrich the owner’s life, into an overwhelming burden. The entrepreneurial dream morphs into a relentless slog, more ensnaring than liberating, leading to burnout, financial distress and profound personal, health and family issues.

The ultimate consequence is a business that cannot sustain itself, leading to its eventual shutdown.

Michael Gerber’s solution to the common plight of technician-turned-owners is the Franchise Prototype model. He suggests that businesses should be designed to operate as if they were franchises from the outset, regardless of whether they ever intend to become one. This model is predicated on the idea that a business should not depend on its owner but rather on the business systems themselves, with the systematization of the entire operation as the key to success. 

This includes standardizing work processes, developing an operations manual, and ensuring that every task is repeatable by anyone, not just the owner. The aim being to create a business that is independent of the person who owns it, with the role of the owner, according to Gerber, being to work ‘on’ the business rather than working ‘in’ the business.

Gerber’s vision is that this approach will transform small, owner-dependent businesses into scalable, independent entities that can thrive without the constant input of the owner, allowing them to eventually step back and let the business run itself.

However, the solution Gerber suggests for why most small businesses don’t work doesn’t fit a particular subset of technician-turned-business owners. The concept of scaling and stepping back does not resonate with them and overlooks the validity and value of the path chosen by those who find fulfillment in personally doing the technical work. To them, creating a job for oneself is not a failure to launch into ‘true’ business ownership, as they are not looking to create a scalable business that runs without them. Rather, they want a stable, manageable means of livelihood that aligns with their enjoyment of the work they do.

Unfortunately, this leaves them in a proverbial Catch-22: either they adopt Gerber’s solution, which requires a degree of scaling plus eventually stepping away from doing the technician work themselves, or suffer the inevitable negative outcomes if they don’t.

Nano-franchising  provides a solution to the dilemma by offering a third option that balances the roles of the owner as a technician and the sustainability of a well-managed business. It redefines the conventional narrative and Instead of urging technician-owners to scale up and distance themselves from technical work, nano-franchising enables them to remain the one carrying out the work in the field. 

This is achieved by transferring almost all the entrepreneurial, managerial and administrative responsibilities to the franchisor, sparing them from being overwhelmed by these aspects. Nano-franchising, therefore, presents a unique solution that respects the technician-owner’s desire for hands-on involvement while providing the necessary support to avoid the pitfalls of small business ownership.

Nano-Franchising Has World-Class Customer Support

Another key differentiator of Nano-Franchising is that it provides world-class Customer support, with the Customer being defined not just the person who Consumes its service but, equally, the person who Provides those services too.

This world-class customer support begins with a culture of service. From the nano-franchisor to the expert customer support agents and the nano-franchisees, everyone embraces the culture of being in service to others as the foundation on which nano-franchising’s customer support is built.

In essence, it starts with the people who embrace a culture of service seeing it as the bedrock on which its customer support systems are built. Then cutting-edge technology is layered over that with an omni-channel support system and various other technologies all culminating with a world-class experience that Customers, both consumers and providers alike, can count on.

Conclusion

Nano-Franchising is a unique subset of franchising, with its cornerstone being that the technician is always the business owner who personally carries out the work which, in turn,  creates a level of commitment and dedication that can’t be replicated in any other work arrangement.  Subsequently, Nano-franchisees are highly motivated to consistently provide dependable and quality services because nobody cares like an owner.

Very small by design, with the technician-owner representing a singular franchise unit, scaling is limited to two extra team members, provided the nano-franchisee is the one carrying out the work with the others working as on-site assistants.

Support services are significantly enhanced, offloading almost all administrative burdens to the Franchisor protecting the technician-owners from the overload that causes most small businesses to fail. Subsequently, this helps to produce world-class customer support to both providers and consumers alike.

What started out as a way for Mark Baker of Motivated Brands Inc.  to address the high technician turnover rate that besets the residential house cleaning industry has become much more. Nano-franchising motivates Canadians  to write their own success stories by giving them the opportunity to love what they do and earn a good living with its unique business model helping to redistribute wealth and raise the socio-economic status of service industry technicians on the front lines.

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