The economic climate presents various challenges. The world is opening up through the use of digital technologies, the pace of change is increasing and the power is very much with the consumer. Excitingly for franchise groups, this opens the door to embrace a raft of opportunities.

Fundamentally, the success of the franchise model has not changed – it is predicated on both sides of the equation winning. We just need to shift our thinking on how to win.  Franchise groups are well placed to invest in technologies, pool resources and share cost. Additionally, they have the advantage of accessing great amounts of data to form consumer insights and make informed, win-win decisions.

Use Artificial Intelligence (AI)

The robots are here and they are your friend. Real time data provides invaluable insights for a franchise business. Having the power to predict a consumer response to a promotion encourages franchisees to follow franchisor recommendations. For example, larger chains to use predictive technology to determine impacts of moving chocolate brands to different shelves on Valentine’s Day before the event occurs. Sales and margin projections enable better decision making, which is valuable when network-wide marketing funds are being used.

Additionally, the franchise industry has been subject to increased administrative requirements (with particular scrutiny on staff payments). AI provides endless opportunity for smarter staff management, as well as franchisee recruitment (ability to screen and test franchisee capability without taking up significant human hours). AI is a game changer in the franchise space and it must be embraced quickly.

The store is your hero

Creating memorable experiences is critical for attracting and maintaining customers. Inside Retail’s recent conference highlighted the importance of continually offering a different in-store experience. Customers are constantly looking for something extra and fresh to encourage return visits. Organisations have invested in education and learning experiences (product demonstrations, cooking lessons, jewellery making) to differentiate and provide a sense of ‘new’. Winning at franchising and providing a compelling experience must go hand in hand. Otherwise you will eventually lose out to online competitors.

Embrace Dynamic Pricing

Dynamic pricing involves amending prices in real time to adapt for customer purchasing behaviour. This involves both system investment, but also re-thinking overall pricing strategy. Pricing strategy is core to protecting margins and promoting the health of your franchise network. This stems from how you share bargaining power, how online items are priced and how much franchisees can sell products for. The franchisor being unable to ‘fix’ franchisee prices adds another element for consideration in pricing strategy.

The customer wants the best available price and value for money. With smart phones offering immediate access to compare stores and competitors, franchisors need to consider how prices are set through multiple channels (online, in-store, wholesale) and determine how to retain their value proposition. The natural reaction is to discount, but it consequently erodes gross margin and tightens both franchisee and franchisor profitability.


How to win at dynamic pricing?

Empowerment. Franchisees need adequate training and resources to understand the implications of changing prices and how it can work for effectively for them. They are ultimately going to decide whether or not to comply with recommended pricing. The benefits must be clear, data driven and the implementation seamless.


Create a knowledge sharing hub

Benchmarking enables whole of network insights. Blended with the appropriate focus on culture it can encourage powerful learnings amongst franchisees. Knowledge sharing can contribute to improvements in sales, local area marketing activities or wastage. Franchisees gain invaluable knowledge on how to operate the business and a forum must be created to share insights. This will only occur if a culture of community is encouraged and rewarded. Consider incentives that will encourage franchisees to share knowledge and highlight examples at meetings and conferences.

The final word

Winning at franchising requires nimble thinking and willingness to adapt quickly. The opportunity is to redefine a new era of best practice in franchising. Putting both sides of the equation at the heart of your decision making is a good place to start for achieving this.

More information? To find out more, give us a call on 1300 023 782 or email team@cdrta.com.au.

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Craig is the principal consultant of C&D Restructure and Taxation Advisory and has been working in the industry since 1999. Having established C&D Commercial Partners in 2015 the precursor to the current business.

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Post Author: Craig Dangar

Craig is the principal consultant of C&D Restructure and Taxation Advisory and has been working in the industry since 1999. Having established C&D Commercial Partners in 2015 the precursor to the current business.

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