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| editor's
NOTE |
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For three years we carried occasional reprints
of the weekly radio commentaries of Elbert van
Donkersgoed, then Strategic Policy Advisor of
the Christian Farming Federation of Ontario (CFFO),
Guelph, Ontario. They appeared under the column
title “Letters from Ontario.”
About a year ago, van Donkersgoed became the
executive director of the Greater Toronto Area’s
Agricultural Action Plan. Continuing the tradition
of weekly commentaries from the CFFO is John Clement,
the group’s general manager. With his permission,
we will continue occasional use of the CFFO columns.
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October 12, 2006: Franchises are an extremely
popular form of business arrangement in Canada. In fact, our
country is one of the franchise capitals of the world, contributing
a whopping 10 percent to our economy. Yet for all its popularity
as a business model in retail and food outlets, franchising
has drawn nary a whisper when it comes to the business of
farming.
Over the past 20 years, I’ve heard only two people
seriously market the idea of using franchises in farming.
One was an Ontario university professor who touted the benefits
to farmers from exploring a farmer-owned and controlled franchise
system for purchasing and selling farmland. The other was
a businessman who was looking to set up a company to market
organic beef around the world. In this scheme, farmers would
buy a franchise to produce the beef and would have to adhere
to the franchiser’s exacting set of standards about
production. Although I can’t say for certain, I don’t
think there was much uptake for either of their ideas.
On face value, franchises don’t make a lot of sense
in a marketplace that has traditionally rewarded bulk, undifferentiated
products. And with farmers being among the most fiercely independent
people in the world, there has been little motivation amongst
them to explore the concept. But with an increasing part of
the market for farm products requiring value-added approaches,
franchises could conceivably find a foothold someday in farming
due to the increased need for collaboration, coordination,
risk sharing and other factors. They could be considered value
chains, with a twist.
Some people say that franchises aren’t much different
from signing a supply contract with a big company, but that
overlooks some of the benefits to franchisees within some
of the better arrangements. The better franchises in other
areas of the economy offer extensive training to the franchisee
in areas like operations, technical details, management and
product knowledge. Applied to agriculture, it could include
training of agricultural workers, human resource help, extension
of production and marketing knowledge, branding of products
and so on.
Farmers have debated for years ways of gaining collective
clout in the marketplace while achieving maximum independence
and profitability. And there have been a number of models
produced to achieve those goals, including marketing boards
and cooperatives. As the marketplace changes to reflect more
value-added opportunities and innovation, it may be only a
matter of time before some entrepreneur figures out a way
to balance the independent nature of farmers within a franchise
arrangement that provides the benefits of a larger corporate
entity.
Although franchising will probably never become a big factor
within farming, it could become an interesting model to explore
for certain value-added initiatives, particularly if the model
could be massaged enough to fit farmer aspirations. But one
thing’s for sure—it would have to warrant the
franchise fees people pay to enter the system.
At the end of the day, if it isn’t profitable for everyone,
there’s no way it’s going to happen. 
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