It's a Digital World: Technology is Changing International Franchising
In 2015, I reported on the increasing use of technology in international franchising. Today, technology has become even more essential to the operation of franchised businesses around the world. Global use of technology in franchising includes franchise management, development, operations, training, social media, mobile pay, online delivery apps, marketing, and web-based POS systems. Here are some examples of how technology is helping franchises around the world do business more productively and changing the way both franchisors and franchisees do business.
- Chris Grandpre, CEO and chair of Outdoor Living Brands. "Technology is an important mechanism to increase the efficiency of how our five franchise models are operated in the field. As we can free up man-hours by automating activities, we create time to focus on revenue-generating activities for the mutual benefit of the franchisees and franchisor. Our team is regularly working to improve the technology platforms used across our systems. As a multi-branded franchisor, we've been working to deploy a consistent CRM tool across our franchise models, thereby making it easier for our franchisees to expand into one of our related brands and to cross-market our services at the consumer level." And as Outdoor Living Brands expands beyond the U.S., their digital technology allows them to better manage international license operations 24/7.
- Keith Gerson, president of FranConnect, says that more than 700 franchise brand clients and 140,000 franchise locations worldwide are using its centralized and integrated franchise and learning management system (e.g., MBE Worldwide in Milan, Italy; Young Rembrandts in Beirut, Lebanon; Albaik in Jeddah, Saudi Arabia; and Groupe FL in Paris, France). The company's cloud-based, multi-language and secure franchise management system is accessible 24/7, resulting in cost-effective and timely real-time support and training of licensees and their franchisees on a global basis.
- Albert Kong, CEO of Singapore-based Asiawide Franchise Consultants. "Franchise companies in Asia are cognizant of the fact that digital products and services affect their business. The Southeast Asia region has a robust economy generating an annual combined GDP of US$2.5 trillion and growing at 6 percent per year. Couple that with the fact that there are more than 600 million people, 40 percent under 30, almost all with a cell phone or two with them all the time. Technology is essential as they focus on businesses in tune with their lifestyle in the arena of food and beverages, education, beauty, retail, healthcare, and other service sectors."
- 7-Eleven Thailand recently announced that it will roll out advanced AI technology, including facial recognition of employees and customers, across all 11,000 stores in the country. The technology they will use can monitor such things as how long a customer lingers in specific places in the store, and even record their emotions. It can identify members of 7-Eleven's loyalty program, allowing management to offer them tailored promotions. Then there is Pizza Hut in Singapore, which recently introduced a robot that has a female voice, greets patrons with a "Hello," and then takes the customer's order and processes the payment. Payments are made using Masterpass mobile payment.
- Daniel Alley, a partner with Milan-based ADEA, reports that in Italy, labor costs are extremely high and, for this reason, modern technology is the key to profitability. For fast food brands, kiosks can account for up to 85 percent of in-store transactions. Also, he says, introducing automated kitchen equipment has increased efficiency and the standardization of the offer while reducing personnel. U.S. brands operating in Europe invest heavily in technology and are bringing this know-how back to the States; and kitchen manufacturers have dedicated units focusing solely on making equipment for fast food/fast casual brands more efficient.
- Ned Levitt, a franchise sector attorney with Dickinson Wright in Canada. "As is the case in the business world generally, technology changes are having a huge impact on franchising in Canada. Operating manuals are almost always provided and stored on an intranet for ease of access and revision. Savvy franchisors are creating apps for customers to place their orders (including for pick-up) and cut waiting time. If a franchisor does not learn the ins and outs of social media, they may find their brand sullied by a dissatisfied customer or even a competitor. These are just a sprinkling of the technological changes happening today. The future, given that your piece of technology is obsolete as soon as you take it out of the box, will bring more and more rapid technological changes than have ever been seen before."
- Iain Martin, the Franchising Centre in the U.K. "Perhaps the most significant and rapid change is in the area of franchisee recruitment. While some franchisors continue to use the established recruitment/lead generation vehicles (e.g., exhibitions, franchise magazines, portals), many are finding that their return on investment is decreasing because their target audience is looking elsewhere. We have known for several years that buyer behavior was changing, i.e., serious candidates will typically do a lot of online research on a brand, prior to making a formal inquiry--which for the most part will not be through the medium that alerted them to the opportunity in the first place (PR article, web portal etc.). Thus the quality and quantity of information provided on a franchisor's recruitment website is becoming critical. And of course if the franchisor's website is poor, they'll never know how many quality candidates they missed, because they'll never inquire. So enlightened franchisors look for ways to drive relevant traffic to their websites. This has resulted in an increased use of proactive digital marketing, which targets candidates based on both their technical attributes and also their disposition to making a buying decision now."
But Wait, There's More!
Here are a few more instances of how technology is changing the way franchisors do business around the world.
China. In 2016, China's mobile payments reached US$5.5 trillion, about 50 times the size of America's $112 billion market, according to consulting firm iResearch. In China this year mobile phone payments using networks like WeChat will surpass credit card companies like Visa and Mastercard in total global transactions per day. Today it is not culturally savvy to pay for your meal at one of the almost 5,300 KFC restaurants in China with a credit or debit card.
Delivery. According to a recent McKinsey & Company study, the global market for food delivery has topped US$100 billion, or 1 percent of the total food market and 4 percent of food sold through restaurants and fast-food chains, with an annual growth rate estimated at 3.5 percent for the next five years--all enabled by relatively new technologies.
Denny's and Alexa. In example of a U.S. franchisor using technology to better serve its customers, in March Denny's announced it has partnered with Amazon to further expand its digital ordering network (Denny's on Demand, launched in 2017) to Amazon Alexa voice ordering. The introduction of the skill for Amazon Alexa voice ordering at Denny's is among the first from a family dining brand, as Denny's builds its role as a restaurant "omnichannel" innovator.
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