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Over the past several years, digital transformation––integrating technology into all aspects of a business––has become essential for franchises of all types. And while change is hard, change within a franchise system can be even harder due to the relationship between franchisors and franchisees. But it doesn’t have to be. Here are seven tips to help franchisors facilitate digital transformation within their systems.
- Bridge the Franchisor's objectives and the Franchisee's need––Franchisors and franchisees may not always be in sync when it comes to business operations. A franchisor may want to protect the brand (and its network) by requiring all franchisees to implement a managed firewall solution. A franchisee, on the other hand, may only be willing to support the firewall solution if they have remote access to run their daily reports.
The trick is to align the Franchisor’s and Franchisee’s objectives and needs. For instance, franchisees may be more apt to embrace new technologies that deliver tangible benefits to them, such as labor savings or increased sales. Case in point, at first glance, digital menu boards may seem expensive. Yet, they may appear more feasible as an investment when integration with online ordering can lead to simplified pricing and added capabilities such as store-specific pricing. - Stay flexible to accommodate a wide range of financial situations––Within any franchise system, store performance typically follows a bell curve. Some franchisees barely cover their monthly costs and require a minimalist approach to technology initiatives. Others may experience enormous success and want to invest further to drive growth. In franchising, digital transformation options must be able to accommodate different situations. Otherwise, franchisees on either end of the spectrum may be lost.
- Communicate through influential franchisees––Franchisees listen to their fellow franchisees. The same words out of the mouth of another franchisee can carry far more weight, credibility and influence than when spoken by the franchisor. The strategy for driving the adoption of digital initiatives, especially ones that might receive pushback, is to create influencer momentum. Build a network of champions who will advocate for the solution.
- Facilitate tech stack integration––Franchisees are often small/medium business owners who need help integrating independent technology solutions. They may not have the staff or resources to complete the integration on their own. They also may not have the spending heft to negotiate with suppliers. Yet as a collective, they represent an enormous business opportunity for the franchisor. As a result, franchisees need help finding proven solutions that have been deployed successfully at larger enterprises that they can learn from and model; they need technology standards industry-wide for tech stack integrations that they can rely on.
- Educate franchisees on market technologies––Franchisees have their hands full with day-to-day operations. They may not be technologists; they may need help deciphering the business value of a proposed solution before they are willing to invest. Provide franchisees with a comprehensive view of the market, educate them about the technologies and benefits, and explain how the proposed innovations will enable them to keep up with changing competitive conditions.
- Supplement with third party services––There is a practical limit to the franchisees’ capacity to execute technology changes. Design solutions that leverage franchisees’ operational and technical capabilities and when necessary, supplement with additional 3rd party services, like those available from a Managed Services Provider (MSP). MSPs can reduce deployment risk, improve the timeliness of IT delivery, enhance technical capabilities and ensure success.
- Seek a neutral and trusted advisor–– In situations where the franchisee/franchisor relationship is challenging, a neutral third party can be helpful to facilitate digital transformation. An MSP can serve in this capacity, engaging with franchisees as they explore solution options and make buying decisions.
Clear communication, market education and careful tech stack integration emerge as core strategies to foster acceptance and adoption. By applying these seven tips, franchises can successfully traverse the path to digital transformation and remain competitive and relevant in a fast-changing landscape.