In an increasingly digital world, finding a tech-savvy franchisor can be the key to success for any first-time franchisee
Technology isn’t necessarily always the first thing people think of when making a foray into franchising but it can prove both an invaluable asset and ally when trying to grow a business with limited resources.
Ultimately, anyone looking to grow their own business has one main goal. “Every franchise owner wants to make as much profit as possible,” says Nick Strong, managing director of Franchise Intelligence, the franchise consultancy. But the more time a franchisee spends on non-revenue-generating tasks like payroll or capturing enquiries, the less time they have to focus on bringing the brass into the business. By automating some of these processes, technology can help them refocus their energies on the task at hand. “Technology allows franchisees to spend more time with clients and less time on admin, so more money can be earned and their margins can be larger,” Strong adds.
Because of this, it’s important that prospective franchisees give tech due consideration when eyeing up franchises. “They should assess what they need to run a business in their field and then see if the franchisor is offering all the tools they require,” says Ben Brookes, director of franchising at Agency Express, the provider of estate-agency board services. Whilst a franchisee’s first priority should be any industry-specific software they require – whether that’s booking systems or point-of-sale technology – it’s also important not to undervalue more generic solutions like cloud accounting tools or invoicing solutions. “The more the franchisor can bolt on the better,” he says.
However, merely having an extensive software suite isn’t enough; it also needs to be kept up to date. “Software changes all the time and so do the requirements of the client,” Brookes says. “If something dramatic changed within the industry, you’ve got to be able to move with that.” Ultimately, it’s no good putting your life’s savings into a tech-focused franchise if most of its network is still running Windows XP. Perhaps even more than a comprehensive tech toolkit, franchisees should be looking for indications that a franchisor makes a point of keeping up with the latest tech trends. “It’s a continual process,” he says. “If they’re not investing in their systems, they’ll be falling behind.”
Even if a prospective franchisee finds a tech-savvy franchise, this doesn’t mean they should just sign on the dotted line without digging any further. Due diligence is an essential part of buying a franchise, so a potential franchise owner should subject a franchise’s software to the same level of scrutiny as its financials. Brookes recommends that they arrange a one-to-one meeting with the franchisor and ask if they can get a first-hand look at how its systems work. “That would be my first question: ‘How are you utilising the technology that is out there and can you show me?’” he says. “If they can’t, then I’d be very concerned.”
But this is far from the end of the process: Brookes suggests getting in contact with existing franchisees and asking them questions on how the franchisor’s tech is helping them. “Does it provide all of the services that they need it to?” he asks. “What are the pitfalls? What are the problems?” The next step is to speak to competing franchises and see how their technology compares. “Assess whether what they’re offering is equal, better or worse,” he says. “That obviously gives you a good yardstick.” Finally, prospective franchisees should ask the franchisor if it is able to put them in touch with clients to find out how its systems benefit them.
Another important consideration for a prospective franchisee to make is the potential return on investment that a given franchisor’s tech can offer. “Look at the cold, mathematical calculation of the investment that has gone into a franchise’s technical systems versus the cost of taking it on,” says Strong. As long as a franchisee is getting more value in terms of tech than it’s spending in fees, it will represent incredibly good value for money. “If you’ve got access to half a million quid’s worth of development, you’re just never going to be able to top that,” he says. “In which case, it’s worth getting involved.”
All of this is well and good but it presupposes that a franchisee has a certain level of technological knowledge. What about those who are less confident when it comes to tech? “Don’t focus on technology,” Strong says. “Focus on what life will look like as a trading franchisee and what will be incumbent upon you to be successful within that franchise.” Concentrating on what they need to build their business should prevent even the most technophobic franchisee from becoming overwhelmed. “As long as a system still enables you to be nimbler, faster and earn more money, then the technical side of things is something that you don’t need to worry about,” Strong concludes.