The winning franchise formula: global control versus local autonomy | Global Franchise
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Friday 7th October, 2022

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The winning franchise formula: global control versus local autonomy

Insight

The winning franchise formula: global control versus local autonomy

Mastering the balance between international unification and individual franchise location success

We’ve worked with thousands of franchisors and franchisees over the years, and we’ve observed quite a few differences in the level of centralized control that franchisors maintain over the customer experience and the standard operating procedures followed at individual franchisees.

At the one extreme, we have seen franchisors who prohibit their franchisees from making any changes to services, products, prices, promotions or marketing communications at the local level, preferring to control everything from headquarters. At the other extreme, we have seen franchisors who don’t enforce a common set of services and products that franchisees should offer, meaning that each location must define their own service offering and customer experience, even if it differs materially from other locations in the same franchise system.

“Stored or prepaid value items like gift cards, memberships, and packages assume much greater value when they can be used at any franchise location”

While there truly is no right answer, and a good software system should offer the flexibility to support different levels of access controls to franchisee owners and their staff, we have found there is a set of principles that seems to hold true for everyone and can be correlated with faster franchise growth and higher customer satisfaction scores.

Use global client records

The average consumer doesn’t grasp what a franchise is or even know which of their favorite brands are franchises and which are corporate-owned. As a result, customers expect to be able to walk into any location with your brand name on it and have their information readily accessible. They want their client notes, purchase histories and loyalty points to follow them and accrue no matter which location they go to.

It’s frustrating and even disconcerting to walk into a familiar brand that you’ve been to many times in the past and find that they have no record of you and want you to register or complete new paperwork from scratch. One of the greatest assets of franchise brands is the recognizable name that stands for something in the consumer’s mind, and you should make sure you don’t diminish this goodwill by treating the customer as a stranger when they walk in the door.

Another advantage of global client records is that your marketing communications will be more tailored in both content and cadence. Don’t you think a client would find it strange to pick up their dog from a grooming appointment at one location only to receive an email that it’s time to bring their pet in for its regular grooming session from another location on the same day? Consumers today have come to expect tailored marketing communications across channels, and this is only possible with a single unified client record.

Finally, you’ll never learn the lifetime value of a customer, her visit frequency, her upsell potential, or her buying habits if you only get a partial picture of her engagement because she has duplicate client records at each of your franchisees.

Offer global gift cards, memberships, and packages

Stored or prepaid value items like gift cards, memberships, and packages assume much greater value when they can be used at any franchise location.

Imagine if you could only use your Starbucks card at three locations. Wouldn’t it immediately lose most of its perceived value in the mind of the consumer? But Starbucks was smart enough to make it usable at any location (even those owned and operated by concessionaires at airports and stadiums), making it a fantastic convenience tool and common gift item. The success of the program speaks for itself as the Starbucks card reportedly accounts for over 40 per cent of Starbucks’ reported revenue today.

It’s true that it can pose a challenge when gift cards or memberships purchased and paid for at one location are used at different franchisees’ locations, but this can be solved automatically and seamlessly with a reconciliation process that your point of sale runs in the background. Sophisticated systems will even move money through automated bank withdrawals to make sure that everyone is made whole at the end of the day.

A rising tide lifts all ships, and the more gift cards, packages, and memberships you have outstanding, the greater your brand loyalty and visitor frequency will be, and that’s good for franchisors, franchisees, and consumers alike.

Go hybrid on services, products, and promotions

We’ve found the franchises who do best from a revenue growth perspective tend to have consistent service menus and product offerings that must be carried at all franchisee locations, but with the flexibility to offer some local SKUs that only make sense in that market.

For instance, most hair salon franchises will require franchisees to carry a core assortment that can be marketed through national advertising campaigns, but they allow their franchisees to carry a few locally made products that resonate with local consumers. Similarly, some coupons and promotions benefit from being distributed at a national scale (like a Mother’s or Father’s Day special) while others make more sense only at the local level (like a state pride celebration).

In speaking with our franchisors and franchisees, we’ve found that consumers actually respond best to a largely consistent offering across locations, but they seem to really appreciate the ‘treasure hunt’ delight that comes from a hyperlocal offering they weren’t expecting because it mitigates the negative sentiments surrounding big corporations at the expense of the local business.

Another advantage to having global products and services is that it makes it far easier to analyze data coming in from all your locations. If a 60-minute hot stone massage is called something different at each location, it becomes difficult if not impossible to understand sales and customer trends related to that SKU.

All of the powerful machine learning and AI-driven tools coming onto the market today only work if you feed them clean data from all your franchisees. If a system cannot understand a customer’s preferences and habits, then it can’t effectively market to her or improve the offering.

Be global but with local flair

We’ve found that the best franchises focus less on individual experiences and instead focus on building a strong brand that each location adheres to, while still allowing for individual franchisees’ “personality” to shine through as they know their market best.

As you continue to grow and scale your franchise, having an agile, cloud/SaaS software platform allows you to experiment, learn, and easily implement changes across all your locations so you can grow your franchise and maintain a unified brand identity.

The author

Ethan Anderson is the founder and CEO of MyTime, the leading cloudbased appointment scheduling and point of sale solution for enterprise and franchise service organizations.

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