Technology Solutions for Emerging Franchisors
Some of the more difficult decisions facing emerging franchisors involve technology — the level of development needed in the early stages of growth; which types of systems to tackle first; and whether to buy from outside sources or to build platforms internally. Often, significant up-front costs must be balanced against the multitude of advantages that are enjoyed by an advanced, integrated technology system.
A recent study by the Boston Consulting Group illustrates four general principles to keep in the back of your mind: (1) consumers have embraced digital solutions, (2) early movers in an industry have a significant advantage, (3) brands need a well-defined digital strategy, and (4) there is no “one size fits all” answer. Forward thinking franchisors should strive to make technology a part of the system’s strategic vision, and it’s important to get technology right at the beginning to avoid costly overhauls down the road. Often, franchisors that react rather than planning ahead are left with several different platforms that are completely incompatible.
From a legal perspective, franchisors can minimize the possibility of joint employer liability by mandating systems as opposed to mandating procedure, which creates the perception of control. Though the facts are in dispute, the impression of control createdby McDonald’s scheduling software and how it was used by franchisees was scrutinized heavily in its dispute with the NLRB.
As noted above, there is no one size fits all answer, and it goes without saying that different franchise systems, especially across different industries, will have disparate needs. Franchisors, however, should select technology that promotes brand consistency and emerging franchisors should “begin with the end in mind.” We recommend that franchisors strongly consider implementing a technology fee in their franchise agreement, with the right to reasonably increase the fee over time as technology requirements evolve. Attending industry events and engaging technology solution suppliers is a good way to get a feel for the current landscape, and networking with more established brands can be an invaluable tool in finding the right balance.
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