Innovate Or Perish: A message for businesses in the franchise space
Innovation in the franchise space means creating or adopting systems that streamline business operations. Integrating and streamlining processes from point-of-sale to marketing, accounting and payroll is the secret sauce of franchising success. It requires learning from experience and putting those lessons into practice to create the systems that best serve your franchise and franchisees.
One of the main pain points in franchising is the detailed accounting required if a franchisee works with, for example, 50 different vendors. When you order from a lot of different vendors, there are multiple accounts to reconcile, statements to match, and a lot of bookkeeping to be done.
One innovation that can benefit franchisors and franchisees is a central billing system. Franchisees can make one payment electronically, and the central billing system automatically disperses payments to all individual vendors. A franchisee can now just make one payment rather than 50 or more.
Electronic inventory ordering
It’s critical to streamline vendor relationships with franchisees so that all locations can electronically order products on demand and stock individual stores. This helps with inventory control. For instance, at Tint World®, we developed an e-commerce system, which allows for individual consumer online product purchases that can be delivered or installed at a customer’s local store. This helps connect the online world with the storefront, and expanded warehouse dropship inventory that allows franchisees to benefit from e-commerce sales.
Another innovation that is useful for many franchise operations is coupling a cloud-based point-of-sale with a cloud-based accounting system. Some other protocols, such as key performance indicators and payroll, are incorporated into the system, and the result is an electronic dashboard that provides real-time accounting of multiple benchmarks.
Franchisors and franchisees can log in to compare the cost of goods to sales and access data on employee productivity, purchasing and pricing. This allows both parties to see where there is room for improvement. The software allows franchisees to tie in to point-of-sale and ordering but also provides a standardized accounting system.
A common franchisee pain point is figuring out payroll laws, benefits, retirement, bonuses and commissions. Let software systems do it for them. Franchisees can use the services of a national HR accounting firm that is tied to a store bank account. With a business management platform that covers virtually all financial tasks, franchisees can focus on developing their staff and servicing customers.
Marketing online fulfillment systems and the ordering process for promotional materials should also be automated. This allows franchisees to order shirts, hats and other merchandise from a standardized marketing and merchandise fulfillment center, keeping your brand on point and again allowing your franchisees to focus on their staff and customers instead of negotiating with local vendors.
Provide these automated systems across your franchise. Franchisees only need a general understanding of the systems and principles, and they don’t have to figure out advertising, marketing, suppliers or accounting. Your franchisees want to run a business, not be financial or accounting experts. It’s easier to run a profitable business if your franchisees don’t get bogged down in details and have an easily accessible, automated accounting system. It also simplifies and promotes owning multiple franchises that adds value to both the franchisor and franchisee growth.
These single-access programs can also benefit customers and bring them back for more business. At Tint World®, we have automatic tracking and communication of everything from real estate lease renewal terms to warranty information and automated reminders. This allows the franchise owner to focus on even better customer relations and maintains compliance.
Automating the hard parts
Running a franchise gets harder as time goes on if franchisors are not staying ahead of the curve. If you aren’t evolving, your business becomes less sustainable. Increasingly, prospective franchisees are interested in owning bigger stores and multiple locations that are basically turnkey operations. This is an easier sell if all the hard parts are automated. If you streamline the franchise and franchisee level, it makes it easier for franchise owners who own multiple locations.
Summing it up
In closing, here’s some advice for franchisors who want to innovate: If you don’t get behind the counter to see what your franchisee’s pain points are, you are not going to have the information you need to implement positive changes. Get behind that counter and try to run operations for a while. Listen to what your franchisees tell you. Establish a franchise advisory council so store owners can communicate problems.
As for franchisors who don’t care about innovation or improving and streamlining operations? Get ready to be left behind because that’s what is going to happen.
Charles J. Bonfiglio is the founder, president and chief executive officer of Tint World® LLC, a privately-owned franchise chain of independent retail window tinting, mobile electronics, auto accessories and appearance centers.