Franchising: friend or foe?
COULD FRANCHISING HELP NEW ZEALAND POST DELIVER? WILL IT BE ALLOWED TO? SIMON LORD POSTS HIS INFORMED OPINION.
LATE LAST YEAR, New Zealand Post announced plans to franchise more of its PostShop services to local businesses. The news created a howl of outrage from the E tuˉ union, which claimed that franchising postal services would result in lower wages for workers and lower quality service for the public. A spokesman for the union said, “From what I’ve seen, the franchise model delivers a lower quality of service and it reduces people’s wages. Where it’s franchised out, it’s concerning for me that it ends up being a race to the bottom.”
The comments from readers below the Stuff article made interesting reading. While some were supportive of the range of services and levels of expertise available through dedicated PostShops, more were critical of the limited hours, long queues and occasional bad service they had experienced. A few were predictably anti-franchise in any form – an ongoing prejudice often born of ignorance or gossip, rather than experience – but many appreciated that the reality of New Zealand Post’s situation means that maintaining dedicated PostShop outlets is unrealistic in all but the highest traffic areas. Franchising enables postal services to be provided locally by sharing costs of premises and staff across a wider range of activities.
In some ways, it is hard to believe that post offices the world over have found themselves in such a situation. They had a superb infrastructure of depots, hubs, outlets and delivery systems developed over many years. They offered a vast array of services and enjoyed massive recognition and trust from their customers.
Yes, email and social media decimated letter post and direct mail, but online shopping meant courier and shipping services grew dramatically – look at the success of Fastway and Pack & Send, to name but two (franchised) examples.
But while others saw the potential and started from scratch, New Zealand Post failed to change its letter-post focus and adapt fast enough. It didn’t help that it became an SOE – a profit centre for government – rather than a national service where the benefits were shared among millions of New Zealanders and hundreds of thousands of businesses.
To add to its problems, the industry was increasingly deregulated to those who were prepared to invest for long-term gain rather than take short-term profits. The end result was always going to be that the bricks and mortar side of the business would be better outsourced to other businesses which had the ability to handle it, especially when they were prepared to subsidise it because of the extra traffic that a Post Shop franchise would generate.
UNDERSTAND THE ETHOS
New Zealand Post has franchised a number of its operations for many years now but, although it has employed some of New Zealand’s most experienced franchise executives as managers, I’m not sure that the organisation itself has ever quite ‘got’ the franchise ethos. This is the idea that franchisees need first-class training and business support if they are to make the most of the opportunity put before them, excellent systems with regular upgrades, and, above all, the principle that for a franchise to prosper and grow, both the franchisor and franchisees need to be able to make a fair return on their investment of time, resources and money.
That uncertainty isn’t helped by the fact that franchises only offer some of the services of PostShops. There seems to be a philosophical disconnect between the different arms of the business, managed and franchised, one of which is describing the other as ‘a race to the bottom.’ Small wonder that 100-percent franchised businesses and 100-percent corporate businesses are finding New Zealand Post to be the competition they love to have.
THE POWER OF FRANCHISING
The traditional strengths of franchising are outside investment, committed local owner-operators, and a flat and decentralised management structure. These can be hugely beneficial to any business that needs to operate multiple outlets in a fast-changing market.
An organisation like New Zealand Post could potentially resolve many of its issues with local outlets, local deliveries and even regional depots (like Fastway) if it embraced franchising fully. Along the way, it could also restore the quality of community service that has declined so much over recent times, help some people into business and ensure employment for others.
To do that will take fresh vision and real commitment on the part of all concerned – government, board, management, unions, employees and franchisees alike.
Consensus might be hard to reach, but if the alternative is the further decline of a vital service then no-one will win.
Franchising isn’t the enemy here, whatever the unions might say. With Amazon likely to come here, a fast and efficient delivery and collection service will be more valuable than ever. Franchising could help New Zealand Post restore that – but will it be allowed to?