The Franstributor Business Model

The Franstributor Business Model


What does a company do when they want to grow their distribution network but a conventional business model has limitations? They combine a franchise model with a distributor model and create a Franstributor ™ © business model.

The traditional distribution model allows a product’s creator to license exclusive or non-exclusive distribution of products. This model has worked well for thousands of products such as: Coca-Cola, Diehard and Exide batteries, Kohler bathroom supplies, Krocs sandals, Tumi bags, Allstate Insurance, Lennox (both the china and air conditioning) Fannie May Candies, and many more.

However, in some situations, the product creator wants additional control over the day to day operations of the distributor or simply a better way to increase profitability. For instance, a distributor can sell your product but may also stock directly competing products. They may also stock indirectly competing products and try to push their customers to these products because their margins are higher. The product creator also has no control over the effort level of the distributor to attempt to sell their product. A franchise solves these issues.

Midas Logo

Many prominent companies have used the Franstributor business model:

I have saved the most ingenious use of the Franstributor model for last – Midas International. The Midas model has deteriorated a bit since the glory days when they were known as Midas Muffler. From the early 1980s through the 1990s, the muffler business was exceptionally profitable. A well-performing Midas Muffler Shop could net in excess of $500,000, and top stores netted over $1MM (in 1980 dollars too).

Knowing it was their business model that made franchisees successful, Midas corporate found some ingenious methods to profit from each franchise location. Here’s some of the ways Midas leveraged the Franstributor model:

This model was exceptionally profitable for Midas and provides valuable lessons how you might leverage a powerful business model of your own with the Franstributor business model.

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