Look Inward First: Contextual practices, not borrowed best practices, create strong systems

Franchising as a business model can be seen to produce some common outcomes and processes that brands follow across industries. These commonalities can be the result of copycatting, but the best-structured franchise systems look internally at their processes and culture. They determine which unique systems and standards fit their brand. Matching other brands inside or outside of their industry is unrelated to the goal, which is to create the right systems for that particular brand.

The cookie-cutter approach to franchise system business structure and legal documents lessens the efficiency and effectiveness of the relationship for both the franchisor and franchisee. One-size-fits-all solutions can negatively affect the sustainability and return on investment, and the franchisor-franchisee relationship can suffer. A boilerplate approach affects the efficiency of the recruitment effort and creates issues in system sustainability. Managing the system becomes more challenging than it needs to be.

People refer to franchising as an industry, but it’s not. Franchising is a sector of the economy; it’s an alternative method used by industries for expansion and downstream product and service distribution. It is made up of more than 100 distinct industries. Within each of those industries are companies at different stages of development, performance, makeup, products, and services. Some have national and global potential, and others are limited to regional growth. With such diversity, the concept of best practices frequently touted in franchise lectures and on podcasts makes little sense and is frequently counterproductive.

To maximize success, companies need to focus on contextual practices, which require you to look through the lens of a company’s history, culture, environment, consumers, economics, franchisees, and other relevant factors. Thinking that franchise systems are fungible, ignoring the brand’s underpinnings, and copying another brand’s best practices leave you with less than satisfactory results. Creating a franchise strategy and managing that system based on the principles of contextual practice are essential for brands and their franchisees to prosper.

Internal Audit

The temptation when a system change is needed is to look outward at competitors, industry trends, and what other franchise systems are doing. While external context matters, it should be secondary to a rigorous internal audit. What is driving the need for change from within your system? Is it a breakdown in operational consistency across locations? A shift in your core customer’s expectations that your current model no longer serves? A gap between the founding philosophy of the brand and how it is delivered?

The answers to these questions are brand specific and should produce a brand-specific solution. Generic best practices borrowed from outside your system may solve a generic problem but rarely account for the history, franchisee demographics, operational culture, and customer promise that make your brand distinct. The most durable system changes feel inevitable to the people inside the brand, like a natural extension of what the brand was already becoming, not an external imposition.

It’s important to conduct an efficient audit to understand the brand’s underpinnings and the changes required. A philosophical approach that we have used with our clients for many years focuses on five key elements: consistent, sustainable, replication, communication, and culture.

Perhaps the most important of the five elements is understanding the system’s culture and how it shapes the brand’s relationship with franchisees and, through them, the consumer. This is closely followed by communication and the methods employed when things are going well or when conflict exists.

Cultural alignment within your corporate or support team must come before franchisee engagement. If the people responsible for implementing the change don’t genuinely believe in it or can’t articulate how it connects to the brand’s values, franchisees will sense the disconnect immediately. Internal alignment isn’t just about getting everyone on the same talking points. It’s about ensuring that the people closest to franchisees, your field consultants, regional managers, and support staff, have deeply internalized why this change matters and are prepared to model the mindset you’re asking franchisees to adopt.

This inside-out approach also means being willing to examine whether your internal systems and behaviors are consistent with the change you’re asking franchisees to make. If the change requires franchisees to embrace a more transparent, collaborative operating model, that same standard needs to be visible in how your corporate team operates. Culture is contagious in both directions.

Many layers of work need to be considered when updating your current offerings, including how you approach imagining change and then going through the development process. How do you communicate the “why,” the process, and the change? How will franchisees and customers perceive the change once it is introduced? These questions must be asked and answered by your team.

Don’t fall into the trap of examining every change in the context of whether someone else is doing something similar. Instead, start to think of your brand contextually through the five tenets of effective franchising: consistent, sustainable, replication, communication, and culture.

Change is hard, but standing still, making minor tweaks, or copying someone else’s strategy because it feels less disruptive rarely leads to sustainability or growth. There is a long and growing list of brands that stood still and are no longer with us. Remember, change takes time, and it requires an open mind. Frequently, an outside shepherd can guide your way.

Andrew Seid is senior consultant at MSA Worldwide. Contact him at [email protected] or 860-604-9189.

SPONSORED BY:
MSA Worldwide
MSA provides domestic and international franchise advisory services to franchisors and companies seeking to establish franchise and licensing systems. Learn More