The Fine Bros YouTube scandal – What can we learn for franchising?

The dust has started to settle on the Fine Bros scandal that hit YouTube last week. With confusion and anger over the proposed business model, what has been the outcome for franchising?

Who are the Fine Bros? What is the scandal?

The Fine Bros are a pair of American entrepreneurial brothers who became famous for uploading ‘reaction videos’ – videos that show people reacting to clips online. At their peak, they had over 14 million people subscribing to their content.

Last week, the brothers ignited a furious online backlash after they attempted to copyright the genre of ‘reaction videos’ and wanted to sell their format to other creators.

The Fine Bros, in an update, likened their licensing agreement to franchising a Burger King outlet.

However, the brothers said that new creators would not be able to share the use of their intellectual property and video format, or be allowed to trade under their name. All these things and more would be included in a genuine franchise agreement.

A lot of anger has been directed towards the seemingly underhanded nature of the business model offered, and has lead to the Fine Bros losing over 350,000 subscribers to their content.

With the impact of the scandal still being measured, what can we learn for franchising?

1) Franchising is still commonly misunderstood

The main thing that should concern anyone connected to franchising is the conflation between the terms ‘licensing’ and ‘franchising’.

In the case of the Fine Bros, it is even more interesting. As the people pitching their idea, it appeared that they had little understanding of how exactly they should phrase their own business model.

This is extremely concerning, for two reasons:

  • If the people who have built a product don’t know exactly how to deliver it to an audience, then what chance do the audience have of understanding what they are being sold?
  • If that confusion turns to anger, then the business models mentioned are at risk of having their reputation damaged.

2) The next generation of franchising is at risk of being turned away

A huge problem for franchising is that the scandal was played out in front of millions of people, many of whom sit within the 18-30 range of their core demographic of Youtube (Digiday). These people are likely to become the next generation of business owners.

The impact of these scandals (although they may ‘one offs’) could be devastating for the reputation of franchising.

Research from suggests that 67% of their job seeking audience have an aspiration to own their own business, yet only 35% know anything about franchising.

If all these people learn of franchising is from these types of scandals, then the industry as a whole may suffer.

Therefore, if we want to continue to grow the market and bring more and more people into franchising then more needs to be done to educate people on what exactly franchising is, and how it can benefit them.

This leads onto the final point…

3) Franchising needs to promote its own achievements

The final learning that has come out of the Fine Bros scandal is that franchising needs to shout from the rooftops about its own achievements.

Ultimately, the checks and balances within the industry are something that separates it from most other business practices, and something we should be proud of.

Being likened to business models that do not stand up to the same scrutiny as franchising has the potential to return franchising to an association with shady business practices that the industry has done so well in removing over the past three decades.

It is up to us, the franchise community, to continue to speak up about the rigorous due process that goes into keeping both franchisor and franchisee protected alike, and how franchising has made business ownership accessible for the masses.

What Next?

If you’re interested in finding out more about the process to own your own franchise, why not check out our six step education guide here.

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James Coombs

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