The top 5 challenges for franchises on the path to digital transformation

Dan May, commercial director at IT specialist ramsac, gives you the inside track

Digital transformation allows companies to upgrade their existing business models to take advantage of new technology and new consumer behaviours. For franchise businesses, there are a number of unique challenges to tackle in order to make the most of any digital investment.

But do franchises need to completely transform their businesses? The franchise market is continuing to do well in the UK, despite uncertainties over Brexit. According to the 2018 British Franchise Association NatWest franchise survey, the UK franchise industry employs 710,000 people and is currently worth £17.2 billion to the UK economy. In addition, 93 per cent of franchisees say their businesses are profitable, while 60 per cent of franchises turn over more than £250,000 annually.

Though franchises will continue to grow, digitally enabled businesses will continue to challenge older franchises to adapt to digital platforms. These factors affect a number of organisations that did not start out at the advent of digital.

The reason for this is because while technology can improve productivity and service, it’s the social upheavals that affect businesses most. Changing consumer behaviour and expectations mean that businesses need to be doing more to deliver quality customer experiences through digital means.

Older franchises need to change before they fall behind. New businesses that are ‘digitally native’ will be able to provide the service people crave and pull customers away from established names. Simply look to the high street if you need proof.

The challenges facing established franchises in the face of digital transformation can be summarised as:
1.Rolling out change.
2. Maintaining a consistent online presence.
3. Aligning internal systems.
4. Harnessing the power of data.
5. Accepting the new frontier.

1. Rolling out change
The first challenge to digital transformation within franchises lies in understanding the structure of a franchise. Non-franchise businesses only have to consider digitalisation along two channels: internal and external.

Internal channels include office communications, internal processes and so on. External channels cover everything beyond, including procurement, distribution, customer service, marketing and PR.

Franchisors have a third consideration: rolling both these changes out to their franchisees. In order to roll out digital transformation to your franchisees, you first need to get them to buy into your new concepts. Listen to their needs and find digital solutions that support everyone and drive the whole franchise forward.

2. Presenting a consistent online presence
Digital transformation opens up new doors in marketing that can lead to a range of challenges. The most important of those is consistency.

Franchisors can’t allow their franchisees to promote their businesses without any controls. To do so is to invite damage to your brand and reputation as the result of a non-compliant campaign.

It is important that franchisors take an active role in all advertising initiatives that relate to the franchise business as a whole. Brand guidelines need to be expanded to include digital advertising across all platforms, as well as how franchisees interact with consumers online.

Facebook, Twitter, Instagram and other social media platforms are indispensable marketing tools that secure customer loyalty. Franchisors can’t stop franchisees from setting up their own Facebook page and for the most part it’s likely to be a benefit. The platform makes it easy for local franchises to cultivate followers and promote on social media.

Other channels like Twitter, Instagram and LinkedIn require more thought. The key questions to consider are:

• Does your franchisee or region have enough interest to support a separate profile?
• Do your operators have the capacity to run these accounts?
• Does your franchisee or region have the budget to create a meaningful presence?

There’s no need to do social media for social media’s sake. In fact, having no presence on a platform can be better than having a token appearance. Consumers who use social platforms expect businesses to use them as competently as they do.

To protect your franchise business and guide your franchisees, it’s important to issue specific guidelines regarding the use of social media platforms. This should include how to respond to direct messages online and how to conduct themselves online, both in ton and interaction with other brands, concepts and trends.

3. Aligning internal systems
Most established franchises built their websites over a number of years. In that time they have accrued dozens of pages that have been built on different platforms, using a variety of plug-ins and applications. Though the process of rolling out a new franchisor website can take a considerable amount time, it’s an opportunity for you to add value to your franchisees’ experience.

A problem that holds true for all franchises is how to create and syndicate content with the right amount of oversight. Especially for franchisors that have franchises in dozens of countries that speak different languages, creating an effective framework to support them requires investment in building and managing a digital infrastructure.

A cloud-based solution is ideal in this situation. Digital workspaces like SharePoint and Bynder allows franchisors to distribute content and digital assets easily. Franchisees can rely on the assets that are uploaded there, so they have peace of mind that their content adheres to brand guidelines.

On the other side, you need to ensure your franchisees use content management systems that can integrate with your customer relationship management system, website and payment system. This will ensure that from an analytics and attribution perspective everything will be able to be accurately tracked. This results in a consistent and streamlined experience for the user, while also ensuring data is not missed at the point of a sales conversion.

In the same way that you need to present a consistent experience to your customers, you need to offer a consistent experience to your franchisees. This will ensure a consistent quality of service delivery that will ultimately benefit your customers and bottom line.

4. Harnessing the power of data
Digital transformation results in the opportunity to harness the power of the internet of things. Cloud technology allows franchises to track the performance of internal processes, such as logistics and payroll, as well as digital marketing.

The challenge for franchises, especially global franchises, is the question of correct data use and management. Regional regulations, such as GDPR, place specific requirements on data handling of EU citizens, no matter where you are in the world. For example, If you’re a franchisor in the US using data gathered by a regional franchisee for marketing purposes, you must make sure you’re compliant.

Outside of regional legislation, there is still the question of safe storage of data. Is each franchisee responsible for client data or is the franchisor? It’s important that there are policies and standards in place to address these issues.

Finally, you need to consider how your franchisees can access all this data in order to provide insight into how they can improve their performance at a local level. Without a means to get value out of the big data you’re accruing, you need to question whether it’s worth it.

5. Accepting the new frontier
In the future, franchisees and customers alike will be interested only in those franchise systems and products that have actively embraced digital transformation. This means that digital transformation will become an ongoing evolution, not a switch from analogue to digital.

Accepting this may require taking your business model in a new direction. This will have an impact on your franchisees, which is why getting them to buy into a digital vision of the future is so important.

You must also impress this focus on your prospects. This will attract franchisees who are willing to help drive your digital transformation and take even established franchises into the digital space with passion and energy.

Digital transformation isn’t a business buzzword. It’s an opportunity for established franchises to reinvigorate their brand, streamline their processes and take advantage of new opportunities.

For more information about ramsac visit www.ramsac.com