Developing your franchise playbook

By Nathan Hudson - December 19, 2018

The franchising model adds a different dimension to how business owners respond to trends and challenges. The implications of embarking on a particular strategy is felt not only by head office, but also by franchisees and customers.

There are additional complexities where what is optimal for head office may not necessarily translate the same benefits to franchisees. The varying impacts to multiple stakeholders means franchisors often need several ‘plays’ in their back pocket to implement.

We’ve taken a look at some of the possible plays to provide a complete perspective on how to tackle some common challenges (you may even uncover more plays from reading the below):

What strategy can I employ for controlling social media in franchising?

Play

Implications

Franchisor controls social media

Positives

  • Consistently controlled brand messaging
  • Ability to manage customer queries centrally

Negatives

  • Franchisees may leverage social media better for their store (more active)
  • Franchisees may feel restricted
  • Additional head office support requirements – dedicated staff are required to manage multi-store networks

Franchisee controls social media

Positives

  • High levels of engagement likely by Franchisees because they are empowered
  • More customised social media posts and closely attuned to local customers

Negatives

  • Difficult for head office to monitor numerous profiles and all content posted
  • Franchisees not experienced in appropriate ways of managing negative customer engagement
  • Potentially inconsistent branding and language without ongoing training, templates and style guides 

Curve ball: Shared social media responsibility on a case by case basis where franchisees are deemed capable and well trained. Strong governance procedures implemented by the franchisor.

How do I control the online sales component of the business?

Play

Implications

Franchisor retains online sales

Positives

  • Additional revenue stream
  • Control product delivery as required

Negatives

  • Customers purchase online instead of instore and franchisees get disgruntled
  • May encourage franchisor to have cheaper prices online (versus in store) to encourage customers to buy online
  • Franchisor may be seen as competing against franchisees

Franchisor shares online sales with Franchisees

Positives

  • Franchisee more likely to promote customers to buy online and create a more seamless online/offline experience
  • Franchisee will have more positive engagement with franchisor
  • Franchisee can distribute products that are sold online within their ‘area’

Negatives

  • Franchisor loses the full financial benefit of the sale (these could be quite significant)
  • Added administrative requirements for tracking and distribution may need more sophisticated systems
  • Franchisee will need to closely manage stock and replenishment to allow for online sales provision

Curve ball: Franchisor retains online sales, but does not catalogue products that are sold by franchisees in-store. This enables a unique element to be retained for the in-store customer experience.

How do I monitor transparency on staff payments?

Play

Implications

Franchisor administers payments

Positives

  • Control over the rate and pay received by staff
  • Can ensure all compliance requirements (certificates etc) and procedures are followed
  • Franchisee can focus on operating the business

Negatives

  • Potentially significant administrative burden on head office
  • Relies on systems for producing real time and up to date information from all franchise stores
  • Not aligned with what the franchise model is intended to achieve (providing franchisee ownership with guidance over their store and removing daily staff management from franchisor)

Franchisee administers staff payments

Positives

  • Franchisee retains ownership of managing staff and updates system for new pay rates and staff
  • Franchisor does not have the added administrative burden which would require more support staff

Negatives

  • Franchisor needs good systems to ensure it has transparency over payments
  • Likelihood of franchisee administering cash wages higher, potentially causing other issues
  • Greater potential for inconsistency and errors
  • Additional burden to franchisee

Curve ball: Franchisee administers payments, but is guided by clear information in Operations Manuals and is required to engage/has access to specialist Human Resources Consultants for advice.

These three challenges have been commonly discussed by our clients this year. The ‘play’ used is dependent on the type of business and the owner’s willingness to invest in systems to support the strategy. Whilst only a snippet of many issues that franchising can present, it shows that all decisions require consideration of all stakeholders to find the most appropriate winning play.

Use the festive season to think about how you make decisions in your franchise business and how they might impact all parties.


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Rob Southwell

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Sydney

Managing Partner and Partner – Private Business and Family Advisory


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Brisbane

Managing Partner - Private Business and Family Advisory


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Newcastle

Managing Partner


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Perth

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Melbourne

Managing Partner and Executive Director/Partner- Business Advisory and Assurance


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Adelaide

Managing Principal - Private Business and Family Advisory


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