We’ve all encountered franchising, even if we haven’t realised it. Today, the major focus for nearly all businesses is its identity online and how it exists in the digital sphere.
To be able to assess franchising, however, especially in terms of the digital age, we should know what it is. Franchising.com notes:
“Franchising is a network of interdependent business relationships that allows a number of people to share:
A brand identification
A successful method of doing business
A proven marketing and distribution system”
Obvious examples of this are usually places like fast food outlets. The actual description is that it is an arrangement, says the Business Dictionary:
“… where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications.”
In the case of food outlets, it would be the logo, name, brand, etc., of, say, KFC or Chesanyama.
“The franchisee usually pays a one-time franchise fee plus a percentage of sales revenue as royalty, and gains (1) immediate name recognition, (2) tried and tested products, (3) standard building design and décor, (4) detailed techniques in running and promoting the business, (5) training of employees, and (6) ongoing help in promoting and upgrading of the products.”
This means deals are made between the franchise’s senior people, such as Praxia Nathanael, and the person wanting to use the various techniques, resources, etc. of the business. As a franchisee you benefit by being linked to an established brand, with access to its resources; as the franchise itself you get more visibility, more customers, more sales.
But franchises need not only be, say, another shop or outlet. They can also be digital spaces. For example, if you’re a franchise, how do you manage your digital presence – your, say, website – if you have franchisees.
As MSA Worldwide notes, in an article about the internet and franchising:
“There are … a host of issues that must be addressed, including whether a franchisor’s existing agreements with its franchisees allow them to enter into e-commerce and, once established, how the website will benefit not only the franchisor but its franchisees.”
The internet has been a great equaliser in terms of businesses, and this is perhaps its most important quality. Franchises must keep this in mind when managing their digital presence, before even considering the various policies in regard to what franchisees can and should do with regard to an online presence.
The Entrepreneur’s Mark Siebert writes:
“Two decades ago, if you wanted to compete with “the big boys,” you would need to advertise to get franchise sales leads… That kind of… commitment was simply not economically feasible for most startup franchisors.
Today, while the new franchisor has the same operational and legal costs to get into the marketplace, a college kid with a lemonade stand and a credit card can create a first-rate franchise website over a weekend, run pay-per-click ads on the front page of Google and be talking to prospects by Monday.”
The Internet is one new, major aspect to how businesses should consider themselves – and this will then carry over into their considerations for franchising. Some have made the argument that with the Internet, it’s probably better to consider partnership as opposed to franchising.
“There will be more networking on the Web instead of franchising, [Vincent Thompson, principal at Middleshift] predicted. ‘In earlier years, Internet franchising may have made more sense, but no longer. The Internet has changed drastically since then. Business[es] online need much more than [what] is available through a franchise,’ he added.”
There is therefore plenty to consider when it comes to franchising, because there is a lot to consider with regard to business and its presence itself.
(Image credit: Wikipedia)