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Franchises Can Learn From Software Startups - Part 3: Reacting

clock July 4, 2008 08:39 by author JKealey

This article is the last of a three-part series related to technology in the franchise world. It focuses on what franchisors should be doing to react to the trends presented in Part 2.

Franchisors should be doing a number of things to keep up with the Net Generation. Most of these are straightforward once franchisors realize that people expect lots of information, expect it immediately, and expect their opinion to be taken seriously.

Streamline your processes

The more people use software, the more people expect of it and become irritated if a feature requires extra effort when it could be automated. Users don't pay attention when performing a task repeatedly and introduce errors into systems. Therefore, your business processes, including the software portion of it, should be as integrated as possible. Of course, you cannot integrate all at once and have to work on the pain points for which an integrated solution would save the most time or prevent the most errors. Streamlining your business processes is an iterative process which requires constant effort and attention but is very rewarding.

The processes that are easy to streamline vary for each franchise. However, using product-based retail stores as an example, the integration which provides the most value is between the point of sale and the franchise intranet. The goal is to offer automated sales reporting and centralized product line management. Once that is done, you can greatly simplify in-store product ordering by automating recurring orders via the in-stock quantities, for example.

Franchisors should keep in mind that integration that is already built-in built into a software product line is a very valuable asset. BjEmerson covered this, and other valuable questions, in his post on Blue Mau Mau. As a franchisor, it is your responsibility to periodically bring up the subject of integration with various suppliers to ensure you have an efficient process in place. Keep in mind that integration should not intend to cover all special cases and that you should put manual processes in place to double check that all the information in your system is accurate. 

A fine-tuned franchise is much more appealing to a franchise prospect because of the simplicity of its day-to-day management. Furthermore, if you have developed your own software or processes to make everything easier, the value proposition is even clearer.

Franchise Collaboration

Franchise Collaboration The most important thing a small franchisor can do is to stop any unidirectional (waterfall) decision making. Transparency and collaboration help foster trust whereas keeping everyone in the dark before enforcing a big change is simply not a good business practice. Obviously, you won't be able to make everyone happy all the time but when franchisees feel their opinion is appreciated, everyone benefits. Obviously, this involves much more than technology but franchise collaboration software such as forums and polls can help. Thanks to open source software and online tools, you can even set this up for free. The real added-value comes when collaboration becomes a part of every day tasks, such as polling features directly integrated into the point of sale. This promotes collaboration within the franchise since the franchisees are not required to login to a separate tool when they get back home after a long day's work.

If you don't collaborate with your franchisees, you will lose them, period. If a franchisee leaves you because you never listened to their opinion, you can be sure that people reviewing your UFOC will end up hearing it. On the other end of the spectrum, a franchise which pushes strong franchisee collaboration via online tools can be a strong selling point for new prospect. A simple demo of the current issues being discussed will clear up any fears about ongoing support.

Openly discussing issues and possible solutions with your franchisees forces you to write things down in a logical fashion and think about the issues in a rational way. This simple activity often guides the decision making process and leads to the best decision.  

Give out more information

Franchisors should utilize their website and should not feel shy about posting lots of information to attract new franchise prospects. Obviously, organizing this information is very important as to avoid overwhelming the user but franchisors should post lots of information and treat their prospects intelligently. The website should include a high-level executive summary which allows interested prospects to drill down to find relevant information on separate pages.

The classic sales technique of not giving out too much information, having prospects request additional information, and having a salesman call them back to conclude a deal is no longer the best approach in today's online context: these practices must be adapted. Franchisors who don't display basic information such as franchise fees and setup costs are shooting themselves in the foot for numerous reasons.

First, today's visitors expect more information and they expect it now. Your prospects are probably thinking about starting their own business in this same field and it is your job to show them the wide breadth of problems you've already solved and how it is a better business decision to purchase a proven franchise system. You also need to show how your franchise is better than other franchise systems and your website is an ideal place to showcase your distinguishing factors. 

Second, the volume of franchise prospects on the Internet has increased, although we've mentioned franchisors are feeling  the quality has dropped. There is a growing number of people looking for low-cost franchises and if yours is not one of them, stating your requirements explicitly will help reduce low quality prospects.   If you are looking at catering to this growing niche, you might as well clearly define the lower cost options you are offering (kiosk format instead of store format, for example). Once you've formalized your offering and covered the frequently asked questions in detail on your website, you've developed a resource base that can be utilized by your salesforce.

Keep in mind that it is possible to get information about leads via your website, even if you're posting most of your information online. All you need to do is post a bit of exclusive content on your website which is only accessible after filling out a short form (email address, name and phone number). This gives you a way to contact prospects after the fact while still giving your prospects information when they want it (now!). This exclusive content can be as simple as a two-page PDF brochure or as extensive as a virtual tour of your store with pictures and videos.

Spread the word

Spread the word The first thing you should do as a small/new franchisor is to actively participate in online communities. You should remember that online participation is a give&take relationship and you need to do more than self-promotion or demolish everyone's opinions. You can start by participating online in franchise communities such as Blue Mau Mau and FranMarket and simply writing comments on other people's posts. Everyone has a different background and you can often refer to your past experiences to help clarify posts by other people. You should also look for online communities which specialize in your niche, to raise awareness about your brand but also simply to exchange ideas. If your franchise is a dog kennel, you should look for pet-related online communities.  Finally, don't overlook any local business online communities which may be appealing to you. Hooking up with a local software startup or local artist might put your franchise in a better position to take on the world.

In addition to participating in online communities, you should start your own blog either at Blue Mau Mau or at another free service. There are numerous things you can (and should) blog about:

  • A post for each new franchisee with an interview, franchisee profile, store pictures, etc.
  • What makes your franchise unique (you should be able to find dozens of cool things that distinguish your franchise from the competition)
  • New products or services
  • What the franchise is proactively working on
  • Your lessons learned as a franchisor
  • Partner announcements
  • How you or your franchisees gave back to the community
  • Trends
  • Internal reflections
  • Congratulate one of your franchisees for outstanding achievements
  • How your franchise is saving people money or saving the planet
  • You've got a particular problem and are looking feedback on solutions

Many new bloggers are afraid to reveal the secret sauce if they talk about their lessons learned or what makes them different. They fear the day where their competition will copy their brilliant ideas. In reality, ideas are free and execution is key. Furthermore, if all that distinguishes your franchise is the auto-flushing toilets you installed last year, you've got a problem. You shouldn't reveal every last detail about how you operate, but don't let paranoia overcome you with every little detail. Blogging is a rewarding experience because it puts you in touch with lots of new people which may help you down the road.

More franchisors should blog about the problems they have experienced and how they overcame them as it is an essential subject which will help others. The franchise world is full of people who are looking to make a quick buck and being open about your franchise is a good way to help build a relationship of trust with your service providers, prospects, and franchisees.

Last week, LavaBlast launched Franchise NewsBlast to help franchisors spread the word about their franchise. Our system doesn't focus on franchise opportunities but rather on franchise-related articles that have true value for web visitors

Conclusion

Some people find it easier than others to get their head around the new business context in which franchises operate. We've listed a few high level tasks which help clarify the possible ideological differences between franchisors and the Net Generation. Once these base concepts are better understood, franchisors will be in a better position to understand things such as viral marketing and social networks in order to take advantage of these business opportunities for their franchise systems. Take a look at Franchise NewsBlast, Blue Mau Mau, and FranMarket today!



blast it on Franchise NewsBlast


Franchises Can Learn From Software Startups - Part 2: Trends

clock June 23, 2008 09:18 by author JKealey

This article is the second of a three-part series related to technology in the franchise world. It discusses current trends in both the software and franchise worlds which are relevant, given the similarities illustrated in Part 1. Part 3 discusses what franchisors should be doing to react to this change in business context.

Fact: The world is changing. Technology is the catalyst.

Wicked technology The impact of technology on the way we do business is undeniable, and franchising is no exception. More often than not, franchise success stories list technology as one of the key elements to the franchise's growth. Five to ten years ago, most franchise systems recognized the value of a franchise intranet/extranet as a centralized franchise collaboration tool. More recently, the rise in franchise systems which allow absentee/semi-absentee franchisees has increased the need for software tooling that facilitates remote franchise management

Start thinking about who will be buying franchises in the next decade or two. These people have grown up with the Internet and do not know life without it. A very insightful read on this subject is Diana G. Oblinger's recent publication Growing up with Google: What it means to education as many of the concepts can be projected from current day challenges in education to tomorrow's franchise sales situation. The Net Generation (born after 1982) is now entering the workforce with university degrees. It won't take long for them to look at purchasing a franchise. Thanks to the Internet, the Net Generation has access to vast amounts of information which doesn't always work in the franchisor's favor. A single individual can report scams which rapidly make their way through the Internet. There are even blogs dedicated to reporting fraudulent business opportunities. This generation has learned to question authority and to go the Internet to prove their claims.

The widespread availability of high-speed Internet has not only impacted franchise operations: it has deeply changed our society. The latest trends in software have been user-empowerment (blogs), online collaboration (wikis), and social networking (for business or for fun). In case you didn't know, over a quarter of all Canadians have a Facebook account. If you're thinking that this is a fad for kids and teens, think again as over half of these users are over 30. Reacting today to these social and technological changes does not only help prepare yourself for the future, it also helps you understand your current operating environment because the facts of life for the Net Generation are also true for many older individuals which are no longer marginal.

A few trends in the software world...

Starting a software company on a shoestring has never been easier for a number of reasons. First, high quality open source tools, powerful software frameworks, and the availability of free web services allows competent software engineers to solve problems faster than ever. Second, infrastructure costs are negligible. Everyone already has a computer and an Internet connection... and working from home is an option for MicroISVs. Once you outgrow your basement or garage, co-working environments provide an affordable way to grow your company to the next level.  Even if you operate from home, you can still reach a very wide potential client-base thanks to the Internet and the same logic applies to any kind of business, not only software.

Another trend in the software world is that many cities (examples: Ottawa, Montreal) offer a vibrant software startup community which most people aren't even aware of. Founders are connecting and publicly sharing lessons learned. Funders are even connecting with founders at informal social events focused on growing the community. Twenty years ago, it would have been hard not only to meet startup founders but also to sit them down to hear about their experiences. Today, you can read about it on blogs and join up at local events... and if you're feeling old school, you can still buy books to learn the stories of other founders. As we all know, the Internet makes it easy to contact other people and collaborate online but it does also make it easier for people to meet offline for both business and social events. 

Finding and retaining good people is the single hardest task in a software company, even if you've got money to burn. Money is an incentive, but is far from being the most significant one for software engineers. Indeed, just take a look at Maslow's hierarchy of needs to discover esteem and self-actualization are higher in the pyramid yet cannot be purchased with money. What developers are looking for are interesting challenges in a great work environment and most large organizations are unable to take advantage of this fact, which push the best software engineers to work at smaller startups or even start their own company. The best talent have plenty of opportunities to pursue and consequently don't often look for jobs on sites such as Monster whereas bad employees always end up unemployed and pollute the system. The solution in the software world is to be active in the software community and utilize niche-specific job sites such as the Joel On Software job board.

... That are also present in the franchise world

Which one would you pick?In the franchise world where we are seeing lots of concepts, such as home-based franchises, growing rapidly because of their low start-up costs. Many people dream of being their own boss while doing something they love and it now easier than ever for them to start their own business. Striking gold is (and always will be) hard, but one can make a decent living with a MicroISV (thanks to niche markets on the Internet) or home-based franchises (thanks to franchisors who know what it takes to make the concept work). We're also seeing an increasing number of new franchise concepts, partially because the Internet has made it easier to contact experts in franchising (and vice-versa... which is not always a good thing).

I would love to say there is a vibrant startup franchise community on the Internet, but that is simply not the case. There are a few disparate local associations but the web is polluted with franchise opportunity websites, given the high commissions related to franchise sales. However, if you look hard enough, you can find a few good websites which unite franchisees and franchisors under one roof for discussion and collaboration. Furthermore, younger franchisors are turning to blogs and are openly discussion various lessons learned. It would be superficial and discriminatory to claim age is the only factor at play to explain the slower growth of a good online franchise communities, but it is a contributing factor given the fact that franchisors require a substantial amount of capital to launch a franchise. Few, if any, current franchisors are part of the Net Generation.  However, I am optimistic that a number of excellent franchise-related websites such as Blue Mau Mau, focusing on everything other than sales, will help grow the franchise startup community over the next decade thanks to collaboration between franchisors and various franchise service providers.

Finding and retaining good franchisees is an obvious challenge in the franchise industry. Many new franchise prospects are surprised that they are being screened for quality and are unaware that, for new/small franchisors, their individual success can have a strong impact on the success or failure of the whole system. Most franchisors complain about the decreasing quality of leads via franchise websites and this poor quality is surprising given the parallel which can be made with online recruiting systems such as Monster. As more people look for franchise opportunities on the Internet,  it becomes increasingly important for franchisors to be able to efficiently filter through a larger volume of requests but also for them to be proactive about sales and marketing. This can be achieved by participating in online communities dedicated to their niche. Of course, time & effort is a valuable commodity and lower quality leads are to be expected when a franchisor doesn't proactively work on solutions on a daily basis. 

Summary

After discussing changes in our society, this article covered three core trends:

  • Younger people are starting businesses on a shoestring budget.
  • It is easier than ever to connect with other people and learn from their mistakes.
  • The big sites are saturated with people you don't want to hire or have as franchisees. 

Part 3 will talk about what you should be doing to make the best of this changing environment. Your homework for the next week is to participate in a few online communities of your choice (Franchise, Startup, or Local). Also, take a look at Franchise NewsBlast, which we are launching today.


kick it on Franchise NewsBlast


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Disclaimer

The opinions expressed herein are my own personal opinions and do not represent my employer's view in anyway.

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