A 3-Step Plan to Ensure Franchisee Success in 2021—Step 2: Technology

In the first installment of this series, we shared how to engage your franchisees in planning and budgeting for the upcoming year. Today, we explore why and how to evaluate your current franchise technology and plan for the future.

The end of the year is a natural time to look back at what worked and what didn’t for your company. For franchise brands in particular, this should include a close look at your technology.

Consider the food franchise industry. While many food and restaurant brands have made a significant investment in different technologies over the past several years, many of those tools haven’t provided a return on investment yet. Yet, it is possible for technology to provide a high level of value to franchisees. In fact, we’ve found that about half of franchisees say technology tools are among the top values a franchise brand can provide.

The key, of course, is choosing franchise technology tools that deliver practical benefits and are easy to implement and use. As you continue planning for 2021, make sure to take the time to thoroughly evaluate your current technology and technology fees, so you can better determine what will benefit your brand in the year ahead. Here’s how to get started.

1. Initiate or adjust your franchisee technology fees

FranConnect completed a comprehensive review of 2,191 FDDs over a 3-year period to fully understand the types of fees franchisors are using. We found that 61% of franchisors now collect technology fees from their franchisors (charged through a monthly recurring flat fee). Technology fees are franchisee costs paid to a franchisor to add, update, or upgrade required business tools and systems. What’s particularly encouraging is that 50% of franchisees claim that technology tools were among the top values a franchise provides.

Technology fees have become the standard for ensuring a franchising organization can keep up with a rapidly evolving competitive environment. If you are not currently charging a technology fee (or aren’t charging a high enough fee), you may want to consider collecting or adjusting that fee in 2021, so you can equip your franchisees with the technology they want and need to grow their units.

2. Clean house of unnecessary IT clutter

Franchisees and employees are accessing more and more business applications, according to a study conducted by Okta. According to a Wall Street Journal article about the study, small to medium-sized business enterprises jumped from an average of 53 software programs and applications in 2015 to 73 in 2018, while larger firms reported an average of 129 apps per company in 2018. This analysis is based on login activity on Okta’s network of more than 5,600 companies worldwide and a survey of more than 1,200 U.S. workers, and was conducted between December 2018 and January 2019.

We have grown beyond the information age. Now, there is arguably too much data, and very little of it is being acted on. As a result, franchisees are overwhelmed and aren’t effectively using the tools they have. This results in lower levels of franchisee engagement and utilization of these tools.

This spurs the need for many franchisors to move to a centralized franchise management platform, which can eliminate the need to log into many disparate systems. This enables all data to be imported into one platform solution and readily visible on a single pane, keeping everyone hyper-focused and aligned around the most important elements of their business.

The best practice these days is to have all relevant data imported into a “persona-based” dashboard that shows what’s most important to franchisees and franchisors based on their role in the organization. If you’re a CEO, you’re likely going to want to see the most important KPIs across all departments and networks, such as royalty collections, a roll-up of the P&L, unit-level revenues, and franchise sales closings. 

On the other hand, someone in franchise development may want to key in on areas such as new lead creation, response times to new leads, call activity, no-response rates, discovery days, etc. In many cases, you’ll create greater adoption and engagement of your technology while the costs associated with a platform solution will be less expensive, as you will find that many existing applications and software solutions may be redundant. 

Technology can help or hinder your organization, so it’s worth the time to evaluate what’s working and what may need some improvement. For a deeper look into getting more out of your franchise technology and tools, download our e-book, “Optimizing Franchise Development: Old School Principles Meet New School Tools.”

Editor’s Note: The original article appeared on FranConnect’s website and is used here with permission.

Keith Gerson is President of Franchise Operations at FranConnect, a recognized leader in franchise management software. For the past decade, he has worked closely with executive boards and leadership teams that are part of the company’s portfolio of more than 800 brands and 150,000 locations, with a focus on helping franchisors achieve their desired goals in sales, operations, and marketing. For more information, best practices, and guides, visit the company’s Resources Page.