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Franchising is an enticing option for brands as they can tap into the ability and capital of partners to grow. Needless to say, it comes with its own set of challenges - how to design an attractive franchising program, how to position the opportunity, and then the day-to-day grind of managing franchise operations.
The challenges are manifold for brands that manage multiple franchisees. Our conversations with franchise operations leaders and professionals from the retail and food industry has revealed the following as key challenges:
All of this has consequences for the brand and franchisees, leading to unpredictable franchisee performance and limiting brand growth.
These challenges are not limited to new and growing brands. Seemingly large and successful franchising brands face these issues just as much. One of the reasons we've noticed this happen is because software coverage does not extend to 100% of the franchisee operations. In fact, many brands operate their franchise program on a rudimentary stack that includes only Retail Point of Sale (PoS). The rest of the operations is managed using spreadsheets, text messages, WhatsApp, and phone calls.
While it's fine for brands with 5 franchisees or fewer, the issues become quickly apparent after that.
If you are responsible for franchising operations and struggling with both growth and efficiency, it's time to consider a Franchise Management software for your brand.
Not sure whether you need a Franchise Management solution? Consider the following:
The answers to these questions will tell you whether you need a better way to manage your franchise operations.
To summarize, you should consider Franchise Management software when you feel like your team is drowning in manual franchising operations and processes.
Remember, the right software will solve issues faced by brands as well as franchisees, paving the way for streamlined operations, enhanced collaboration, and sustained growth.
A Franchise Management software is a strategic investment in the success of your franchising program. Franchise Management is also highly fragmented, with piecemeal and siloed solutions that are not designed to scale.
So, if you are in the market for a solution to lubricate your franchising processes, it's important to know what to look for in a Franchise Management software. Here, we discuss 7 features that are hard to find, but difficult to execute for your program.
Franchisee Onboarding
Contract Management
Inventory and Operations Management
Financial Reporting
Store Compliance
CRM
Surprise Bonus Feature
How long does it take for you to screen, shortlist, and sign up a franchisee? A lot of companies are laid back about onboarding new franchisees, preferring to spend their time hunting for and screening applications. In fact, evolving from forms, Excel, and emails to an app will tighten the entire process.
As a bonus to the reduced screening and onboarding timelines, brands can also unify their document management for all potential franchisees. You get a centralized database at your fingertips, allowing you to gather comprehensive intelligence about why franchisees are approved or rejected and also track their performance throughout their lifecycle.
Note: Some software integrate with KYC verification APIs, enabling brands to eliminate external vendor verification and protect important data from leaking to competitors.
The document that underpins the entire relationship is the franchise contract.
Most Franchise Management software will support uploading contracts as part of a document cloud. Evaluate whether there are configurable access restrictions to the documents from the central repository. Franchisees must also be able to add and access documents seamlessly via a mobile UI.
However, a key feature that many Franchise Management apps lack is contract data abstraction and contract lifecycle management. Find out if your Franchise Management software offers automated reminders for renewals and other imminent dates. Support for contract addendums and approval audit trails are also essential for serious franchises.
A certain way to miss revenue goals is to run out of inventory at your franchisees. Unfortunately, many brands rely on visual checks and notes from their franchisees to know which items are running low on inventory.
Without a fool-proof way to know inventory levels at each franchisee, it is near impossible to fulfil orders before stocks run out.
So, when you pick a franchise management software, ask about inventory management modules that show you inventory levels across your franchise network. If the software can gauge inventories based on Point of Sale (PoS) data and supplies, that should be good enough for most requirements.
Any automated reminders, ordering, and order processing for restocking inventory based on minimum inventory levels is a bonus. Inventory management eliminates manual processes and inefficiencies for both operations at HQ and across your franchisee network.
All franchising is a process of improving financial metrics for franchisees. The financial health of a franchisee depends on their ability to generate revenue for the brand, while maintaining their own profitability.
Many brands depend on manual workarounds and data manipulation to get a picture of revenues, royalties, and payables/receivables from their network. it is not uncommon for payments to be delayed because the brand does not know how much they owe their franchisees. The issue is much more complicated for franchisors with elaborate contract tiers and different terms for their franchisees.
When you speak with Franchise Management software vendors, ask how they can simplify payment calculations and their financial reporting capabilities. Find out if the software can automatically calculate payment dues, raise payment advice, and trigger approval workflows. This feature will make life easier for franchisees and everyone involved with operations, finance, and accounting at your HQ.
A bonus value addition for HQ is the ability to get visibility into the financial performance of franchisees and assess territory-wise performance.
A problem that is not spoken about enough is the risk of poor customer experiences and shutdowns of specific stores.
While most brands have their own Standard Operating Procedures (SOPs), it is not uncommon that they do not have ways to audit whether franchisee locations adhere to the SOPs. HQ usually relies on the franchisee's word and the occasional store visit. This lack of visibility can lead to disastrous outcomes such as poor ratings and reviews from customers or even shutdowns by local authorities.
So, when you invest in Franchise Management software, ensure it has a module to define audit and compliance SOPs for franchisees. The module must enable:
A Store Compliance module enables brands to operate with confidence, deliver consistently good customer experience, and expand with FOFO and COFO stores.
Customers are the lifeblood of your business. How do your franchisees maintain customer data?
Customer data is too valuable to entrust to the whims and fancies of individual franchisees. From Excel sheets to CRM software that can lead data, there are risks to not having the right CRM.
Even if your franchisees own the customer data for their stores, it is important to ensure that they use CRM software that does not leave the brand at risk because of leakages.
Some CRM software have the ability to run marketing campaigns to the database, but you may end up paying a lot of money for such apps. There are also risks associated with improperly set up mail servers. You’re better off using specialized software for marketing campaigns (tools like MailChimp and Active Campaign have free tiers too).
Imagine a brand with 50 outlets. Most of these outlets will be leased or rented. That means, contracts and payments for leases and utilities for each store, which quickly adds up to more than a thousand payments a year. Delays can have unpleasant outcomes, from stores being shut down to utilities being turned off for non-payment. Don’t forget that these processes are tedious and no one likes doing them, even your most junior operations assistant.
In addition, leases introduce another layer of complexity because of the specific ways in which they have to be accounted for in the balance sheet based on lease accounting standards such as ASC 842, IFRS 16, or GASB 87.
Find out if your Franchise Management solution can automate lease administration, maintain lease contracts, and simplify lease payments.
Note: An immense cherry-on-top-of-the-cake feature (that your Operations, Finance, and Accounting teams will thank you for) is if the software can automatically generate journal entries based on leases in the system.
In today's competitive environment, investing in the right tools to run a business is not a choice. By leveraging the power of purpose-built software, brands can streamline operations, maximize efficiency, and ultimately drive profitability across their franchise network.
In conclusion, a good Franchise Management software equipped with these 7 features is vital for efficiently growing your franchise network. The right software will enable you to optimize workflows, improve communication and collaboration with franchisees, ensure compliance with contractual obligations, and make data-driven decisions to drive business growth.
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