Cloud computing in Franchise business

In an older post, I explored the impact of SaaS in the Outsourcing business (see here:  SaaS and the outsourcing function) and the benefits that any outsourcing company and its customers would  enjoy from the adoption of SaaS. In this post I shall explore the benefits that the Cloud computing/SaaS can have in another area: that of the Franchise business.

In a Franchising model there is the part of the Franchisor (the company that offers the franchise product) and the franchisee (the companies that reside “below the umbrella” of the franchisor and reach out to the final customer). In any franchise “package” a number of products and services is offered to the franchisee in order to start and maintain a viable business; typically, this includes stock replenishment for the franchisor’s products, training, sales support etc. In some cases, the franchisor also offers the necessary software to run the franchisee business. And this is the issue that we are interested in, today: It is my strong belief that the most suitable kind of software that a franchisor can offer is the cloud one: Depending on the situation, it could be a private cloud software that the franchisor has built and customized according to its specific needs or it could be a public cloud SaaS product offered by a third vendor.

Adoption of cloud-based software in such cases brings a number of advantages for the franchisor. Let’s see what they are:

• The franchisor complements its “package” with yet another offering: the software. In many cases the franchisee is a SMB start-up which has a lot of things to take care in its effort to get off the ground and start generating revenue. Having a ready-made software solution provided by the franchisor, would be a big help, especially if we accept that fact that these SMB’s have no I.T. expertise and they wouldn’t want to acquire any.
• Having its network working with the same software, the franchisor achieves the goal of uniform end-customer service across sales points: Customer quotations, sales invoices and other customer-oriented processes will be uniform across the network, thus enhancing the overall brand name. And, of course, the franchisor can make sure that the processes that it wants to be followed across the network, actually are! For example “a sales invoice cannot be generated if there is not a previous quotation printed”.
• Apart from the end-customer oriented processes, the franchisor can use the same software to establish communication and collaboration between them and the franchisees. Typical examples are B2B customer support, stock orders, updated price lists with suggested retail prices and more B2B-kind of interaction and transactions.
• When the rules of the game change, the franchisor can use that cloud-based software to apply the new policies and procedures in an instant, across the network. There is no need for special I.T. treatment, complex software upgrades etc. All it takes is installing the new version of the software in the central I.T. infrastructure and instantly it is “spread” across the franchisees.
• Apart from the local (franchisee) business transactions themselves, the franchisor has created a potential basis for consequent portal services in the form of an extranet. For example, a franchisee can search other points of sale to see where the product that the customer is requiring exists in stock etc. That franchisee may lose this sale but he makes sure that the customer stays in his network!
• The cloud-based software that we are discussing would of course be multi-tenant. Therefore, we can safely say that controlling of the franchisor over its network, unified reports and business intelligence would be as easy as “one-two-three” in such a platform. Otherwise, they could be facing the nightmare of data consolidation from remote databases, file transfers, operating costs to keep it running etc.
• Customer uniqueness, cross-sales functions and CRM can be easily implemented in such central software.

But, there are also advantages and benefits for the franchisee, too:

• We already mentioned the “hassle” of software selection and customization that the franchisee would otherwise have to execute themselves in order to reach to an acceptable level of software functions and quality. These also entail some hidden costs that a typical start-up may find hard to face, too.
• We must also assume that any central software solution that is offered by the franchisor (either built in-house or purchased from the SaaS marketplace) would be offered in a lower price, as being part of the general “franchise package”.
• Configuration and customization of the software has already been done and is offered to the franchisee, out-of-the-box. The latter does not need an I.T. consultant to discuss and configure the software according to the franchise business specific needs; this has already been done by the franchisor!
• Depending on the franchisor’s business design, that cloud software may offer a unique customer database where each customer would be visible to any point of sale of the network, even if they have never visited that specific place. This would expedite that sales process and offer a unique customer experience in front of the counter.
• Loyalty schemes and customer-centric overview would be much easier to implement with such software.
• Usual software bugs and upgrades would never be an issue for the franchisee; I guess that the franchisee will make it part of their daily business to look after the software, resolve bugs and plan and execute software upgrades.
• Franchisee software training would be easier and faster, when it comes from Franchisor dedicated personnel that are able to “speak the franchisee’s language” rather then I.T. technical people from the software vendor side. And we all know that software training is not only about pressing the right buttons, but also about how to handle everyday issues and processes. Who is better to describe the latter, than the franchisor, who designed the whole concept from the start?
• Part of the cloud offering could also be a mailing system that the franchisor can offer to its network. Also VPN services for internet access where security and content filtering can be managed by the franchisor central IT dept.

If I had to write a closing statement punch line, it would be this: Centrally designed business models (such as franchising), require clear and robust processes across all levels; what better way to control them than a central Business Application software; what better central software than a cloud-based one!