Operations
How System-Wide Technology Can Help Franchise Brands Succeed Written By GABBY WONG
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n a series of pulse surveys we conducted in March and April, we evaluated the impact of Covid-19 on business continuity and financial performance across the franchise market. The survey yielded some surprising results about the attitudes and perceptions of market impacts, from the start of the pandemic to the seeds of recovery.
and city differently. Consumer demand, along with employee sentiment toward safety, will be highly localized. Further complicating this problem is the absence of a national approach. To get open and stay open, franchised businesses must be in a position to assess the environment at each locale, and against different state and local regulations.
To be sure, Covid-19 is a once-in-a-lifetime crisis that has challenged franchise businesses in every area of leadership, engagement, and business operations. The uncertainty is profound, a a contrast to the normally growth-oriented, entrepreneurial focus that is a staple of franchising. In fact, our survey results suggest that as businesses move through the phases of the pandemic, from the shock of the sudden shutdown to the hardship of the immediate cash and revenue impacts, leaders are starting to settle into the uncertainty. Longitudinal analysis across our surveys shows that franchise businesses are projecting longer recovery times as a result of Covid-19. Specifically, the percentage of companies expecting a recovery time of over a year more than doubled from the previous month by 127% (see our blog from April 30, “The State of Franchising—What We Didn’t Realize a Month Ago”).
Ownership structures and licensing agreements in franchising are complex, with multi-unit franchisees, single-unit franchisees, master franchises, joint ventures, and investor groups all participating with varying levels of ownership maturity. Engagement and support through recovery needs to be “context-sensitive” and tailored to the needs of each unit and owner. The specifics of each vertical must be considered as well, with the impacts of social distancing on business models, products, and consumer demand varying greatly.
Managing uncertainty is not only the key to starting on the path to recovery, but it is critical to sustaining that recovery over time with a virus that experts predict is likely to come back in waves over the next 12 to 18 months. Should you fall short of delivering a safe and consistent environment, you will breach trust and lose the confidence of your consumer base. Information, data, planning, and standardizing processes and engagement across the franchise system are critical in managing through this period of uncertainty – a problem that can be uniquely solved by technology. HOW CAN TECHNOLOGY HELP? Franchise businesses face complexity and risk in managing across a complex web of ownership structures, multiple brand verticals, and diverse geographical territories. As location-based businesses, brands face a diversity of conditions across multiple locales. The virus affects each region, state,
And, given ongoing joint-employer concerns in franchising, brands must balance the immediate need to direct the franchisee in an emergency situation with a longer-term approach of coaching, training, and a focus on best practices in accordance with brand standards. All of these recovery risks must be managed with reduced staff and resources at the brand level. As noted in our recent survey, roughly 54% of respondents have reduced head count at the corporate office by 20% or more. TECHNOLOGY-BASED SOLUTIONS Platform-oriented technology solutions that integrate interactions, information, and processes across the franchise system can help mitigate the business uncertainty associated with Covid-19 recovery. An enterprise-ready operational platform can improve decision-making by: 1. Integrating data and information from each region, state, and locale and across diverse sources of data to provide brands with the necessary situation awareness. This should include data from public health sources, social mobility data, consumer demand and sales data, employee perception data, customer experience feedback, and unit-level performance. 2. Providing executives and field resources with monitoring FRANCHISEUpdate
ISSUE 2, 2020
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