Dec 17, 2020

A Three-Part Plan to Ensure Franchisee Success in 2021: Part 2

Written by Keith Gerson

In the first installment of this series, we shared how to engage your franchisees in planning and budgeting for the upcoming year. Today, we’ll explore why and how to evaluate your current franchise technology and plan for the future.

The end of the year is a natural time to look back at what worked and what didn’t for your company. For franchise brands in particular, this should include a close look at your technology.

Consider the food franchise industry. While many food and restaurant brands have made a significant investment in different technologies over the past several years, many of those tools haven’t provided a return on investment yet. Yet, it is possible for technology to provide a high level of value to franchisees. In fact, we’ve found that about half of franchisees say technology tools are among the top values that a franchise brand can provide.

The key, of course, is choosing franchise technology tools that deliver practical benefits and are easy to implement and use. As you continue planning for 2021, make sure to take the time to thoroughly evaluate your current technology and technology fees, so you can better determine what will benefit your brand in the year ahead. Here’s how to get started.

1. Initiate or adjust your franchisee technology fees

FranConnect completed a comprehensive review of 2,191 Franchise Disclosure Documents over a three-year period to fully understand the types of fees franchisors are using. We found that 61 percent of franchisors now collect technology fees from their franchisors (charged via a monthly recurring flat fee). Technology fees are franchisee costs paid to a franchisor to add, update, or upgrade required business tools and systems. What’s particularly encouraging is that 50 percent of franchisees claim that technology tools were amongst the top values that a franchise provides.

Technology fees have become the standard for ensuring a franchising organization can keep up with a rapidly evolving competitive environment. If you are not currently charging technology fees (or aren’t charging a high enough fee), you may want to consider collecting or adjusting that fee in 2021, so you can equip your franchisees with the technology they want and need to grow their units.

2. Clean house of unnecessary IT clutter

Franchisees and employees are accessing more and more business applications according to a study conducted by Okta. According to a Wall Street Journal article about the study, small to medium business enterprises jumped from an average of 53 software programs and applications to 73 in the last year. This analysis is based on login activity on Okta’s network over the past year by more than 5,600 companies worldwide.

We have grown beyond the information age. Now, there is arguably too much data, and very little of it is being acted upon. As a result, franchisees are overwhelmed and aren’t effectively using the tools they have. This results in lower levels of franchisee engagement and utilization of these tools.  

This spurs the need for many franchisors to move to a centralized franchise management platform, which can eliminate the need to log into many disparate systems. This enables all data to be imported into one platform solution and readily visible on a single pane — also known as a Command Center. The Command Center keeps everyone hyper-focused and aligned around the most important elements of your business

The best practice these days is to have all relevant data imported into a “persona-based” dashboard that shows what’s most important to a franchisee and franchisors based on their role in the organization. If you’re a CEO, you’re likely going to want to see the most important KPIs across all departments and networks such as royalty collections, a roll-up of the P&L, unit level revenues, and franchise sales closings.

On the other hand, someone in franchise development may want to key in on areas such as new lead creation, response times to new leads, call activity, no-response rates, discovery days, etc. In many cases, you’ll create greater adoption and engagement of your technology while the costs associated with a platform solution will be less expensive, as you will find that many existing applications and software solutions may be redundant.

Technology can help or hinder your organization, so it’s worth it to take the time to evaluate what’s working and what may need some improvement. For a deeper look into getting more out of your franchise technology and tools, download our eBook, “Optimizing Franchise Development: Old School Principles Meet New School Tools.

About the author

Keith Gerson

Keith Gerson, CFE brings 50 years of executive franchise level expertise as President and CEO at Gerson Advisory Services. Over the course of his career, he has established a proven track record as a Franchisor and Franchisee where he has amassed success in building rapid-growth, and highly profitable franchise organizations. His focus is on helping franchisors to get to their desired future state in franchise sales, operations, communications, and engagement.

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