A community approach to franchise management

Ambix is a tool for associate communities, and as part of the team I have been looking at a number of different areas where community can help to achieve business goals. Following on from research into alumni engagement earlier this year, I interviewed a number of UK franchise professionals and conducted a short survey into franchise communications.

A range of viewpoints

Our interviewees were drawn from a range of sources, from our own networks to chance connections and introductions at the National Franchise Exhibition. They included both franchise owners and consultants in the industry, and some individual franchisees and license holders. Franchise operations to whom we spoke varied from newly-established networks with two or three franchisees, to substantial groups with decades of experience and hundreds of associates. We stress that this is a small sample of fewer than 30 subjects; survey response numbers were poor, however the insights from interviews were very detailed.

We asked questions about the structure of franchises, the technology adopted to foster communication across those structures, and the goals of such communication. We made it clear to all respondents that we have a specific interest in the use of community platforms. All quotes used below are authentic, but unattributed in line with the Market Research Society Code of Content.

Structural considerations

Structure and communication are inextricably linked. There was a clear difference in communication policy and practice between hierarchical franchises and networked franchises. As franchising is often seen as an easy option for business expansion, removing the need to directly “manage the managers”, we were surprised to find that some groups relied on linear ‘top down’ communication rather than developing a flat structure. However, this is a model we encountered in only three of the franchises we spoke to.

We asked our survey respondents what channels they used for private communications with their franchisees. Half of the respondents used Facebook and / or their own bespoke intranet, while the remainder focused on email and telephone. Communication within the network varied, with email exchanges, newsletters and social media communities slightly more popular than face to face events for building a community spirit; we speculate that this is because franchising allows organisations to spread out geographically, making regular meetups less easy. In a quarter of cases, the franchise made use of area managers and physical mailshots to maintain contact. If the nature of the franchise requires face to face training as part of the offering, this is expected, but it is more likely to be typical of a hierarchical structure.

Achieving business goals

“Communities matter because they help to achieve many business goals more efficiently than transactional approaches.” (The Community Roundtable, 2015). A successful community relies on finding a shared purpose. Shared Purpose
So what are the overarching goals of both the franchise owner and the franchisee? Our interviewees gave us several insights into their objectives.

  • A franchise owner may have opted to grow their business through franchising so that they can step back from the day-to-day running of their business, yet still make a living.
  • A franchise owner needs to recruit and retain good franchisees to reap the rewards.
  • A franchisee will invest in a franchise to build their own business without re-inventing the wheel.
  • A franchisee may want a strong, inbuilt support network.

Our respondents gave us insights into the importance of peer support and mentoring to both franchisees and to the owner who needs a new way of managing them; the challenges and the benefits of good community management; the importance of sharing resources for every stage of business development; and developing the concept of franchisee advocacy to build the network.

The importance of peer support

The Escher Group in North East England conducted a detailed study last year into the habits of small businesses when they seek advice and support.There are hundreds of public sector-led initiatives in place; however, Escher’s results showed that 98 percent of respondents do not trust the public sector to help them with their business; the first point of reference is usually their peers.

In a franchise setting, peer support should be readily available. Other franchisees have made the journey, and there are always insights to be shared. However there is one source which is likely to be less trusted: the franchise owner! The owner has not themselves run a franchise, although they have done the hard work of starting the business. The experience is not the same. Developing a community approach, where franchisees can support eachother, could be more effective than top- down advice in achieving long term goals of retention and growth.

Within our sample, several comments stood out:

“Peer to peer support is a huge element of franchise success.”
“Offering [access to a community platform] as part of the franchise package shows that the franchise has thought about engagement and community.”
“Sharing resources ensures consistency of approach across the franchise.”

It was also clear that the earlier franchise owners looked at peer-to-peer networks, the better. Two experienced franchise professionals, each with more than 15 years in the business, separately told us that establishing communication routines was vital from the outset, as communication begins to fragment at a very small size.

Community management

While speaking to franchise owners specifically about online communities, intranets, and forums, two told us that they had recently closed down their intranets! Both reported similar issues: that the franchisees were using the opportunity to complain and argue, in the hope of attracting the attention of ‘the boss’. However, minutes later we spoke to another owner who sang the praises of their online forum; their positive experience of the benefits to their franchisees, and the feedback (both positive and negative) that they could access, is a model for others.

This is not a matter of chance. Generally accepted practice in community management applies unchanged within a closed business community. Managing that community, and being prepared for inevitable crises, is essential. The people who reported the best experience with communities also invested time in moderation and management. It was also interesting to learn from a third party consultant that mega-franchise McDonalds employs a dedicated team of 4 to 6 people to manage their franchisees out in open communities, keeping track of social media commentary and defusing any issues that might arise.

Resource sharing

All franchises have a need to share resources effectively, and this was recognised across our sample. One well established group has a bulletin board with over 25,000 threads sharing best practice and experience, and up to date key documentation for all franchisees. Others use everything from downloadable documents in a password-protected member area on their site, to cutting-edge hand-held technology which helps agents manage and complete transactions in the field.
One respondent described smaller franchises (fewer than 50) as a group of ‘cottage industries’, all at different stages of development, all requiring access to different levels of resource as they worked through establishing a new territory to developing repeat business. The volume of resources that franchisees need at their fingertips is greater than conventional businesses might expect, as the knowledge base has to embrace every stage of business.

Franchisee Advocacy

One key objective that we had not considered in our initial studies of the market was the importance of franchisees as advocates. The concept of brand advocacy in marketing is increasingly well understood, and the development of digital platforms and social media have made this more and more important in influencing the buying decisions of consumers. “Advocates are 83% more likely than others to share information about products with their network.” – eConsultancy.

What was highlighted to us by several respondents was the fact that the success of a franchise relies upon the successful recruitment of new franchisees. Interested parties will speak to existing franchisees to understand the offering; they may even be recruited this way, as advocating franchisees share information about how good their experience has been. By developing a solid peer community, empowering and supporting people, the recruitment process is enhanced by happy advocates. Building a community where franchisees are comfortable together gives them a good experience to relate to others, presenting a united front and a positive message to their own networks.

Conclusions

We set out to discover more about the relevance of community to the growth and development of franchise operations. Our sample gave us considerable insight into how community can be a valuable tool, in ways we had not imagined. However, there is still a reluctance in some quarters to move away from a hierarchical structure and linear communication patterns which would be more typical of a traditional employee / employer relationship. There is considerable evidence from our respondents to suggest that a franchise can expect a good return on investment from a properly managed community, benefiting all concerned.