IT NOT NEED TO BE SCARY

Inside Franchise Business - - Contents -

Tech­nol­ogy helps fran­chisees on a daily ba­sis.

Tech­nol­ogy is de­vel­op­ing so quickly it soon be­comes out of date. This can be quite a headache for most small busi­nesses, but when it comes to fran­chisees their head of­fice usu­ally has ev­ery­thing sorted.

“Most fran­chisors are highly con­scious of the role tech­nol­ogy plays in run­ning a suc­cess­ful busi­ness,” says Amy Re­nae, GM of POS soft­ware ven­dor Shift8. “They do their best to en­sure fran­chisees have ev­ery­thing they need to meet their cus­tomers’ ex­pec­ta­tions.”

Fran­chise Le­gal Mel­bourne prin­ci­pal Ilya Fur­man agrees. “It’s the fran­chisor’s role to be a leader, and that means pro­vid­ing the best pos­si­ble tools for run­ning the busi­ness. In re­tail, for ex­am­ple, this would usu­ally in­clude current POS, stock-man­age­ment and fi­nan­cial-man­age­ment sys­tems.”

As part of due dili­gence, he sug­gests in­tend­ing fran­chisees should in­ves­ti­gate which soft­ware pack­ages are favourites for par­tic­u­lar busi­ness sec­tors. “You should know how the sys­tem the fran­chisor wants you to use is rated on the mar­ket. If it doesn’t fare well, ask the fran­chisor why it was cho­sen.”

Re­nae says both fran­chisors and their fran­chisees need to ac­cept that tech­no­log­i­cal change is an in­evitable part of run­ning a busi­ness. “Change is never easy, but fran­chisors must stay rel­e­vant and up-to-date – and fran­chisees must un­der­stand that this is what it takes to keep their cus­tomers happy and their busi­ness at the lead­ing edge.”

DRIV­ING CHANGE

In some cases, fran­chisees drive the change. “We of­ten see fran­chisees talk­ing to each other about sys­tems or apps that are work­ing well for them,” says Re­nae. “They then take this in­for­ma­tion to the fran­chisor, who might de­cide to im­ple­ment the in­no­va­tion across the group.

“As a sup­plier, we also like this type of feed­back as it pushes us to keep our plat­form rel­e­vant.”

Whether it is in­cluded in the ini­tial fran­chise fee or listed as an ex­tra cost, tech­nol­ogy has to be paid for. Re­nae says an in­creas­ing num­ber of fran­chisors have been im­ple­ment­ing an IT (in­for­ma­tion tech­nol­ogy) levy. “Like a mar­ket­ing levy, it en­sures the fran­chisor has the re­sources to pro­vide a spe­cific ser­vice – in this case, tech­nol­ogy up­dates and sup­port.”

Some fran­chisors ask fran­chisees to buy soft­ware from a par­tic­u­lar sup­plier, spec­i­fy­ing for ex­am­ple MYOB ac­count­ing soft­ware rather than Xero. “This is called third-line forc­ing and, in many cases, is pro­hib­ited un­der com­pe­ti­tion laws,” says Fur­man.

“If fran­chisors can demon­strate they have a good rea­son for the pref­er­ence, such as con­sis­tency across the brand, eas­ier in­te­gra­tion, greater ef­fi­ciency or lower cost, they may ob­tain im­mu­nity from pros­e­cu­tion by the Aus­tralian Com­pe­ti­tion & Con­sumer Com­mis­sion (ACCC). But you may not be able to dis­cern how the fran­chisor has ad­dressed this is­sue by sim­ply read­ing their dis­clo­sure doc­u­ment.

“An ex­pe­ri­enced fran­chise lawyer can help you es­tab­lish whether you can have a choice of sup­plier, and un­der what cir­cum­stances.”

From the most ba­sic ac­count­ing pack­age to com­plex de­liv­ery-track­ing sys­tems, tech­nol­ogy is help­ing fran­chisees spend less time run­ning

their busi­ness and more time grow­ing it, writes Do­mini Stu­art.

RISKY BUSI­NESS

Many fran­chisees are now us­ing tech­nol­ogy to col­lect cus­tomer in­for­ma­tion so they can per­son­alise their of­fer­ings or tar­get their mar­ket­ing. How­ever, a com­pro­mise of pri­vate in­for­ma­tion could put your cus­tomers at risk, harm your busi­ness and da­m­age the rep­u­ta­tion of the brand.

“It is im­por­tant to check that the fran­chisor com­plies with all the rel­e­vant leg­is­la­tion and reg­u­la­tions,” says Fur­man. “Again, a lawyer with ex­pe­ri­ence in fran­chis­ing will un­cover any weak points in the sys­tem.”

It is also pos­si­ble your due dili­gence will ex­pose prob­lems that your fran­chisor is not aware of.

“In this case, you may need to en­ter into a non-ad­ver­sar­ial dis­cus­sion with the fran­chisor,” says Fur­man. “It is im­por­tant to ad­dress any is­sues be­fore you sign the fran­chise agree­ment.”

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