Blog post

Transforming the traditional franchise model

It's getting harder for franchised businesses to deliver on customer expectations. Here's what can be done.

  • Topic
    Unified Commerce, Customer experience

Franchises play a huge role in global retail and continue to go from strength to strength.

In the UK alone there are more than 900 franchising brands - from household names through to growing startups - and it’s not difficult to see the appeal. With lower risk, higher chances of success, centralized support, an existing customer base and an already known brand, the appeal of running a franchise business is strong.

Yet, with changing customer behavior, it's getting increasingly harder for franchised businesses to deliver on customer expectations - especially when it comes to meeting the expectations of customers moving across different sales channels.

So what can be done about it and how can digital technology help?

In this article you’ll learn:

  • What the most common franchise models are

  • What customers expect from franchise stores

  • The biggest advantages & challenges of the franchise model

  • The role of unified commerce in franchise organizations

The most common franchise models

Franchise organizations come in all shapes and sizes. The three most common models are:

1) A franchise organization with individual store owners who have merged under a common brand, but without a common head office.

2) An organization with a common brand and head office who own all the stores and make almost all of the decisions such as store location, inventory, product range and more. They have franchisees who run the store and are responsible for the store operations and the store associates.

3) And finally the most common set up for bigger retailers, a hybrid model where the main organization owns the majority of the store chain but has some individual franchisees.

What customers expect from franchise stores

From a customer perspective a retail chain, regardless of whether it’s a franchise or not, is still a retail chain. The customer views it as one and the same.

They expect to be able to buy online and pick up in store, reserve products in another store if it’s out of stock in the store they are shopping in, return products to a different location than the store they bought it in and return online purchases to a bricks and mortar location etc.

Customers want a seamless experience and as little hassle as possible. They expect the same customer offering, access to the same campaigns, and they want the brand to have the same knowledge about their shopping history and preferences regardless of the channel.

The problem franchises face is being able to give this to customers in a simple and effective way.

That’s why, in order to provide this level of service, franchise organizations must invest in a Unified Commerce Platform.

The biggest advantages & challenges of the franchise model

Without a doubt, the complexities of trying to provide a frictionless customer experience is one of the biggest challenges of the franchise model.

Customers view all sales channels as one and the same - which should also be the outlook of the store owners. However, franchised stores are different legal entities which adds another layer of complexity to the problem. Furthermore, and more often than not, franchised stores compete against each other and will be incentivised by the head office with different sales targets.

However, the franchise model also has compelling benefits.

One of the biggest advantages of an organizational setup as a franchise is having common purchasing channels, having the strength and support of many when price negotiating with suppliers, and ensuring the delivery of goods.

The role of unified commerce in franchise organizations

Without a Unified Commerce Platform and strategy, it’s impossible to give full transparency and availability to the customer.

If the customer wants to know: “Where is the product? Is it available? Where can I buy it?” then a unified commerce approach is the only way to answer the question.

For any retailer, as soon as a customer becomes interested in a product (regardless of the channel), the most important thing is for them to know if the product is in stock, how much it costs and where they can get it from.

A strong franchise organization needs to deliver on this promise while at the same time being able to:

  • Purchase goods through a shared order management system.

  • Empower franchisees to offer local products that aren’t purchased through central agreements.

  • Have a common product register with product images and rich product information.

  • Set common base prices while enabling franchisees to set their own prices and have their own pricelists.

  • Offer central campaigns as well as local campaigns.

  • Offer endless aisle with a real-time view of all unified stock.

  • Have a central inventory management system so products can be returned regardless of the channel where they were purchased.

  • Enable local payment agreements or local payment methods. For example, handling a local gift card connected to a certain shopping mall.

Sitoo handles franchises like this:

  • The "common" product assortment, reflected from the ERP, is mirrored as well as the local products in the franchisees assortment.

  • Sitoo provides Endless Aisle capabilities to enhance fulfillment.

  • All orders and returns throughout the organization are accessible by all franchisees, making it possible for the stores to handle validated cross-franchisee-returns and online returns.

  • Sitoo provides a common gift card ledger that can be accessed by all stores.

  • All stock transactions can be accessed by all stores.

  • Sitoo enables unified campaign and loyalty data when integrated with a CRM.

  • Common administration for shared assortments.

In Summary

Franchise organizations have a variety of setups and agreements. This means any solution that supports franchise must have options for different configurations

Despite the complexities of franchises, a Unified Commerce Platform can transform and simplify retail operations while providing a better and more comprehensive service to customers.

It enables franchises to be unified under one brand and share common information while, at the same time, it supports the individual franchisee to be an entrepreneur and differentiate with local adjustments

Franchised stores retain their autonomy while being able to benefit from centralized systems and a unified approach. This means they are able to allow their customers to shop on their own terms and enjoy all the benefits unified commerce brings.

If you’d like to find out more about how a unified commerce approach can benefit your franchise, we’d love to talk to you.

Let's talk

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