Franchising is a widely-applied model in the retail food businesses，many of the oldest and most successful retail food businesses in the world are franchises, such as McDonald’s, Subway, etc.
Franchising is a mutually beneficial transaction which consists of two parts: the franchisor and the franchisee. The owner of a business (the franchisor) sells the license and the know-how to the person who wants to join the business by opening his own establishment (the franchisee). In this way, the franchisor allows the franchisee to use the brand name and helps them with the setup, training, and sale of the product or service. The franchisee, on the other hand, pays an entry fee, gives a certain percent of the profits to the franchisor and at the same time, helps the franchisor to spread the brand.
However, out of those countless advantages that franchising model can offer, there are some disadvantages that we cannot ignore, for example: the huge amount of entry fee that the franchisee need to pay, the inflexibility of the franchisee of adapting quickly to the changes of the market and the profits needed to be shared with the franchisor (loyalty payment).
In order to compensate the shortcomings of the traditional franchise model, to benefit their customers and franchisees as well as to boost their expansion，Nostrum, the Spanish quick service restaurant chain with more than 20 years of experience in catering industry, plans to tokenize their ecosystem, in the way of building an innovative franchise platform called Cryptofranchise.
The Cryptofranchise is a platform based on blockchain technology that will lead a revolution to the franchise market. Its main goal is to create a participative system among all the different franchise operators, where any legal, commercial and economical issue can be managed from the franchisor’s perspective. The first brand ever to use this platform will be Nostrum
The Cryptofranchise works by inserting a cryptocurrency to the traditional franchise model. By doing this, the whole business system will be nourished as all the participants of the business are even more closely connected, so that the franchisor, the franchisee and the customers may all be benefited. The cryptocurrency which will be introduced into Nostrum’s business is called MealToken. This token will be used in different ways within the ecosystem of the company and be will be tightly bonded to the future growth of Nostrum. With great funding, comes great expectation. The future of the franchise business will rely on Cryptofranchise.
The MealToken mentioned above will be used for three key functions:
- Serves for Fan’s Club members to purchase Nostrum’s products.
- Clients of Fan’s Club will have to top-up their digital wallet first with MealTokens and then purchase food with the tokens in order to enjoy discounts on Nostrum’s products.
- Serves as a entry-fee deposit for franchisers.
- Here is the key point why you can get a franchise business for free. As many other franchise models, the franchisee should pay an entry fee in return for the know-how before starting the franchise business. Under Nostrum’s ecosystem, it enables the franchisee to deposit the entry fee in MealToken and have chance to recover his expenditure once the franchise agreement ends.
- Serves for Nostrum’s incentive mechanism.
- The incentive mechanism works in a way that if the franchisee achieves one of the goals set by Nostrum, such as reaching a certain sales volume or bringing in a new franchisee, it will be awarded with MealToken which can be used to purchase equipments to upgrade the restaurant from Nostrum’s rewards catalog.
Nostrum will also set up a Smart Social Delivery system. It is a simple system which allows acquaintances to deliver Nostrum’s products to each other. Upon delivery of the food, the deliverer will be awarded with MealToken which can be used for the consumption in Nostrum.
The Cryptofranchise model allows the sharing of value throughout the whole franchise network due to the fact that the more the token users exist, the more tokens are in circulation, which will increase the benefits to all the users of the token. Using this model will allow both the franchisee and the franchisor to benefit from the development of the growth of the business, the development of the brand and the opening of new establishments.
The creation of the Cryptofranchise will turn the business into an organized network. The main assets of a franchise is its brand and its impact on the customers. Since the Cryptofranchise emphasizes strengthening of the brand value and increasing the know-how transferred to the franchisee, it will allow Nostrum’s franchisees to benefit even more from both entry fee and royalties.
In the future, this platform will facilitate the interactions between companies which share common interests and values with Nostrum, establishing a co-branding system between different companies and create new business opportunities for the franchisees.
In this way, the franchisee will get more benefits and will be better bonded with Nostrum. In this way, acquiring a franchise business is not only a free deal, but also an opportunity to gain extra value.