The commonly used term “franchise industry” is actually a misnomer, as it implies that franchising and business at large have divergent interests. In reality, franchising is simply a method of expansion and therefore, anything important to business is important to franchising by default.
Currently, there’s nothing more important to a commercial enterprise than adapting to a business arena that hovers between the physical and virtual. E-commerce has not only blurred the lines between realms, but is gradually making them irrelevant. A holistic brand experience is king, while individual facets of a business are just details.
Staggering volumes of online transactions that continue to grow rapidly across sectors are no longer indicative of change, but of a deeply entrenched, immutable new reality. And yet, levels of franchisor readiness for this new normal are highly disparate.
Whereas select players have been both visionary and proactive, others still view e-commerce as mere icing on their franchise cake. Without a timely correction in approach, that could prove a fatal error.
Adapt to new ways pronto
In order to ensure optimal returns on investment for their franchisees, franchisors must be completely tuned into the myriad challenges and opportunities emanating from the bricks-and-clicks ecosystem. Paying attention to the following would serve this objective well:
Fair and equitable e-commerce model
Franchisor e-commerce models vary between a centralized operation controlled entirely by the franchisor to several variations in which franchisees get some of the action. Regardless of the model followed, a majority of franchisors do not view e-commerce as intrinsic to their franchise proposition and tend to stack up benefits in their own favour.
That said, marginalizing franchisees is not only unjust, but also counterproductive to the greater good of franchising of the future.
Bridge technological gap
Legacy systems on which many successful franchised brands have been built are often generations apart from the new technologies propelling e-commerce forward. Bridging that gap with seamless compatibility is vital to a sublime e-commerce experience and operator friendliness.
Be delivery friendly by design
Franchisors need to design their physical premises in ways that prioritize processing of deliveries. This includes storage space that caters to deliveries without intruding on the in-store retail experience and an ultra-efficient shipping infrastructure. In the food businesses, packaging design should be the leading criteria in devising a menu.
Address e-commerce in the franchise agreement
The e-business model for the duration of the franchise agreement needs to be explicitly reflected in terms of the franchise agreement. This also includes addressing and anticipating online IP issues, domain matters and potential infringement of franchisee e-commerce territorial rights.
Remember e-commerce isn’t just a transaction
Everything that impacts and culminates in a transaction - PR, advertising, technology, web design, staff training, data management, cross promotion with physical stores, etc. - must be integral to a franchisor’s e-commerce strategy.
Ensure brand touch points serve each other well
Franchisors must follow integrative business models that are focused on developing a wide community of faithful followers, regardless of their sole or predominant brand touch points. Each channel must optimally serve the other to provide a better unified brand experience.
Devise a well-considered e-masterplan
Many franchisor e-commerce strategies are driven by the fear of missing out than a coherent long-term outlook. Others seem to have a “me too” approach based on little more than anecdotal evidence. However, as the market matures, nothing less than a well-researched, made to measure e-commerce programme will serve the needs of a franchise system.
Potential investors would do well to verify this during their due diligence.
The bottom-line in franchising is the transfer of a learning curve and goodwill to an investor in return for a fee and ongoing payments. For many franchisors, most of this learning has been acquired in the pure-play world of brick-and-mortar, and continues to dominate their core franchise offering.
But the location-agnostic world of the seamless brand experience is a pervasive truth that demands singular commitment and application. Franchisors of every stripe must whole-heartedly embrace this change to empower their franchisees. Anything less endangers their business at a fundamental level and curtails their longevity in this new era.
Sanjay Duggal is CEO of Stellar Eastern Franchising Advisory.
