The 2008 global financial crisis, or “Great Recession”, devastated levels of consumer spending and investment alike. Few sectors could thrive in the faltering economic climate and the franchise sector was no different. Left in survival mode, franchisees struggled to maintain their ever-shrinking market share and the outlook to pitch major investments to prospects was increasingly daunting for franchisors.
A decade late later, the trajectory in both emerging and advanced economies could not be more different. Not only has the franchise industry bounced back from the recession, but it is also stronger and more resilient. Franchising has reaped significant benefits from promising advances in technology that present both franchisors and franchisees with safeguards from the next economic downturn.
A long-held, and proven, industry truism is that a franchise is only as strong as its franchisees. As such, the most important data set a franchisor must monitor, and have insight into, is the set of key performance indicators (KPIs) of each franchise location. New tech platforms integrate software that provides visibility in real time, making KPI tracking easier and more effective than ever before. This allows the franchisor to monitor the health of their entire system, and importantly, lets them quickly provide support to the locations that need it. If a support rep is deployed to a local franchisee, the franchisor can follow the intervention up by tracking the recommended tasks, initiatives and marketing spend. Thus, holding the franchisee accountable and observing how effective site visits are.
Among the biggest technological developments in franchising in the past decade, advances in point-of-sale (POS) systems has proven revolutionary. Point-of-sale (POS) systems ten years ago, were hard-wired, complicated, and even the most innovative solutions were too expensive for emerging brands. In sharp contrast, today’s systems are smarter, portable and cost-effective. New point-of-sale technology provides benefits well beyond the convenience of quick and easy payments, when combined with accounting integration automated marketing and other metrics, it offers an array of value-added benefits. This has given franchisees a level of insight in to and control over their operations they never previously had. A POS system, ideally with a built-in CRM, and integrated accounting through Xero or other software give both sides of the brand’s ownership crucial insight into the store’s financials. An optimal grouping of software can provide a sense of how, well or poorly, they are performing and that information, in turn, can be used by the franchisor for a detailed Financial Performance Representation.
The ascendance of social media has had a powerful and welcome influence on consumer marketing. Franchise brands have adopted the new channels enthusiastically in a number of creative ways. One of social media’s innovations is the enabling of geofencing, which allows brands to offer promotions to customers “who are nearby” or according to location. Capturing impulse purchases has long provided a competitive advantage to retail businesses. The use of geofencing increases the stakes and evens the playing field between brands. Engagement tech, such as filters on Snapchat and other social media applications, is an amusing and entertaining way for retailers to interact with customers. If brands can engage consumers in such a personable way, and offer a great product or service, they are well placed to win! Moreover, astute franchisors who use these consumer marketing applications to open new doors in their development strategies, reap twice the benefit from social media.
Over the last decade, mobile service options have evolved from being a novelty offer into a baseline expectation by consumers. Restaurants without an online ordering option, to offer diners take-out, are at a very real risk of being boxed out by (disruptive) mobile-savvy competitors. The value of “online everything” that mobile offerings provide is of significant benefit for operators and consumers. Mobile apps and online platforms can help franchise owners to save money on staff while offering enhanced flexibility and freedom for customers to exercise greater discretion about what they get and when they get it. Furthermore, operators can plan ahead and capture valuable data from customer information and feedback.
The foodservice industry is characterised by particularly thin margins, where even minor losses if repeated can affect the bottom line. This so-called unpredictability gap, that has plagued many other industries, has begun to close owing to pioneering inventory management tools. The software allows restaurant owners, and operators across a multitude of segments, to achieve the in-depth insight and full control over their inventory and all other aspects of their back-of-house operations. Real-time reporting of key metrics, when integrated with accounting platforms, is one of the most important advancements available to franchisors and franchisees. Less time is spent calculating trends, tracking inventory and managing throughout is freeing. This allows owners to spend more time interacting with customers, creating positive experiences and driving sales. Franchise management, development, operations, training, social media, mobile pay, online delivery apps, marketing, and web-based POS systems have become essential in franchised businesses around the world. In short, the use of technology is helping them do business smarter and more productively.
Outdoor Living Brands credits automating activities with freeing up man-hours. Thus, creating time to focus on revenue-generating activities for the mutual benefit of the franchisees and franchisor. Our team is regularly working to improve the technology platforms used across our systems. As a multi-branded franchisor, the deployment of a consistent CRM tool across our franchise models makes it easier for franchisees to expand into related brands and cross-market the franchise services at the consumer level. Moreover, Outdoor Living Brands’ international expands is facilitated by their digital technology which allows them to manage international license operations around the clock, every single day of the year.
FranConnect, whose 700-plus franchise brand clients and 140,000 franchise locations worldwide using centralized and integrated franchise and learning management systems (e.g., MBE Worldwide in Milan, Italy; Young Rembrandts in Beirut, Lebanon; Albaik in Jeddah, Saudi Arabia; and Groupe FL in Paris, France). The company’s cloud-based, multi-language and secure franchise management system is accessible 24/7, providing the benefit of cost-effective, prompt, real-time support and training of licensees and their franchisees on a global basis.
The Southeast Asia region provides excellent examples of how digital products and services significantly affect franchise businesses. The region boasts a robust economy growing at 6 percent per year, combined with a population of 600 million people. 40 percent of consumers being millennials, almost all of whom always carry at least one cell phone on their person. Technology is essential to this breed of customer whose focus on business is in tune with their lifestyle, particularly service sectors like food and beverages, education, beauty, retail, and healthcare.
7-Eleven Thailand announced the imminent roll out of advanced AI technology, including facial recognition of employees and customers, across all 11,000 stores in the country. The technology they will use can monitor such things as how long a customer lingers in specific places (isles) in the store, and even records their emotions. It can identify members of 7-Eleven’s loyalty program, allowing management to offer them tailored promotions.
Pizza Hut in Singapore recently introduced a robot that has a female voice, greets patrons with a “Hello,” and then takes the customer’s order and processes the payment using the Masterpass mobile payment.
Elsewhere in Asia, the franchise landscape is no less dominated by innovative tech. In 2016, according to consulting firm iResearch, China’s mobile payments reached US$5.5 trillion, about 50 times the size of United States of America’s $112 billion market. Today, it is not culturally perceptive to pay for a meal at one of the almost 5,300 KFC restaurants in China with a credit or debit card. By the end of this year, it is predicted that mobile phone payments using networks like WeChat will surpass credit card companies like Visa and Mastercard, in total global transactions per day.