IT NOT NEED TO BE SCARY

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Technology is developing so quickly it soon becomes out of date.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.”