Monday, February 26, 2007/
With a franchise, you know what you’re getting. Letting your entrepreneurial innovative spirit shine is necessarily constrained.
Innovation in franchising
The magic of franchising is its sameness. Every McDonald’s restaurant shares the same systems, brands, products, décor and taste. Consumers can go to McDonald’s anywhere in Australia, and almost anywhere in the world, and know what to expect.
It’s the same for successful Australian franchise chains like Boost Juice and Bakers Delight — same brand, same products, same customer experience.
That’s what franchisees buy when they buy a franchise — the instructions and permission to run a store, or service business, in the same way that every one else in the franchise chain does, under the franchise brand. It’s what they pay for and it’s what the franchisor expects of them.
How then can a franchise chain be innovative?
To keep a franchise chain dynamic and responding to changing competitive and consumer demands, a balance must be struck between franchisee compliance with the systems — so greatly desired by franchisors — and franchisee entrepreneurialism.
The best franchise chains have franchisee representative committees and other communications systems that can feed back to the franchisor ideas for improvements in products, systems and processes within the business.
Some franchise chains tell their new franchisees “No new ideas for 12 months; after that we’ll be interested”. This way the franchisees learn the system as it is and aren’t tempted to reinvent the wheel.
Some franchisors operate stores themselves to keep in touch with consumers, and in this way they can trial new products and systems.
The world’s most famous franchise, McDonald’s, has an innovation centre in a secret location in Chicago, USA, where new products and processes are designed and tested.
I visited it last year (courtesy of McDonald’s) and saw the researchers working on a toaster that would send a SMS to the store manager if it was going to malfunction, and a new fries cooker that would take 10 seconds off the time it takes to salt a regular serve of fries.
Not all chains have the resources McDonald’s has for institutions for innovation. Nevertheless, the best franchise chains are innovating all the time. Just like all businesses, there needs to be discipline in following systems and a process for coming up with ideas, and implementing them.
On the other hand, many people buy a franchise because they want to be their own boss. They need to be careful — the franchise system is worth something because it already works. If you don’t want to follow the system, you shouldn’t buy a franchise.