Ideas factory: franchisees can be masters of innovation

Franchisees may not possess the risk-taking streak of your everyday entrepreneur but their ideas have led to some game-changing innovations. They are a resource that a franchisor can thus ill-afford to ignore

Ideas factory: franchisees can be masters of innovation

Franchising and innovation. Some people may view them as opposing forces. Given that franchisees tend to buy into a tried-and-tested business model, it could be argued that many aren’t entrepreneurs or innovators in the traditional sense. However, it would be somewhat wide of the mark to suggest that franchising totally stifles innovation. Like all companies, the survival and success of a franchise depends on a regular stream of new products, services and processes. Ideas for such innovations have to come from somewhere – where would be better to turn for a franchisor than the network of franchisees that he or she oversees on a daily basis?

Granted, a franchisee may be more risk-averse than your everyday entrepreneur. That lack of risk is, after all, one of the main draws of buying into a franchise as opposed to starting a business from scratch. But that’s not to say that franchisees are devoid of ideas. “By and large, your very good franchise owners are ‘enterprisers’,” suggests Nigel Toplis, managing director of the Bardon Group, the multi-brand franchisor. “An enterpriser is somebody who will take a proven system and will tweak that system to benefit their own local circumstance.”

A recognition of this should therefore lie at the heart of every franchise agreement, with franchisees able to conduct their business how they like, albeit with some constraints. “You don’t let them run riot but you do let them operate within the parameters of the franchise agreement and the brand,” adds Toplis. “Sometimes people forget that the franchisee is the managing director of their own company. They therefore have a right to be able to run their company, so long as it is within the context of the franchise agreement.”

Indeed, granting franchisees a certain degree of freedom can prove beneficial to the franchise as a whole. The same can also be said of engaging with them on a regular basis. This is good practice in itself, but encouraging franchisees to put forward their own ideas whilst actively involving them in the innovation side of the business can reap significant rewards.

McDonald’s is a great example of how such an approach can pay off in droves. The fast-food giant puts its franchisees at the heart of everything it does. “Our franchisees are outstanding business people in their own right, with years of experience and excellent business acumen,” says Thomas Kelly, vice president, franchising (north) at McDonald’s UK. “They are better placed than anyone to come up with new ideas, new ways of working that could improve their businesses.”

McDonald’s franchisees therefore enjoy a decent amount of flexibility when it comes to their individual outlets. “Our customers have come to trust that whether they’re walking into a McDonald’s in Bristol, Birmingham, Manchester or Glasgow, they can expect the same great-tasting food and friendly service,” adds Kelly. “However, as independent business men and women, our franchisees do have the freedom to help choose what their restaurant will look like, decide which design has the right feel for their area and of course are the decision-makers on who they hire and how they become involved in the local community.”

<p>Without a doubt, engagement with franchisees has contributed to McDonald’s’ success in food and food service innovation. As Kelly explains, the Big Mac, Filet-O-Fish and even the very first Drive-Thru were all thought up by franchisees. “It’s this historic culture of partnership and collaboration that is a competitive advantage for both the brand and the business in its day to day operations,” he says.</p>
<p>Equally though, the company’s franchised outlets – accounting for 70% of its UK presence – serve as useful testing grounds for innovations that may have initially been proposed at a more senior level. “Making sure that the company is investing shrewdly in the right areas really sets us apart,” Kelly explains. “From Iced Fruit Smoothies and Frappés, to giving all our employees access to nationally-recognised qualifications, some of our most iconic moves have been researched, trialled and piloted through our franchisee community.”</p>
<p>Whilst inarguably impressive, big ticket innovations such as these are quite a rare breed in franchising. However, that’s not to say that innovation isn’t a consistent force. Franchisees regularly tweak and change their way of doing things in a way that enhances both their own business and the franchise network as a whole. “A lot of the innovation that happens within franchising is almost what I would call ‘incidental innovation’,” says Toplis. “It happens almost on a daily basis. Franchisees will come to us, say ‘we have done it this way and it seems to work better for us’ and we will say ‘we should do it that way’.” He cites one <a href=Zip Yard franchisee’s use of Twitter for marketing purposes and another’s offer to provide email marketing services to the whole group as examples of this. Indeed, the latter was replicated in another of the Bardon Group’s brands, Recognition Express, a name badge franchise.

But Recognition Express has still enjoyed the benefits of one game-changing innovation, brought about by the ingenuity of a franchisee. “One of our franchisees said ‘if we made that badge look three-dimensional, we could charge more money and we could have a better product’,” explains Toplis. “He essentially invented ‘doming’, which is just a resin and a hardener combined over a piece of plastic. This allowed us to actually produce a badge in full colour. That is innovation and it works within the confines of the franchise. It works for both parties.”

Esquires Coffee Houses is also no stranger to innovation in its ranks. One of its franchisees, Steve Prime, was named bfa Young Franchisee of the Year last year. His decision to alter the opening hours of his Esquires outlet in Coventry’s transport museum to accommodate music, open mic and comedy nights has been replicated by other Esquires franchisees. “It is about giving franchisees the scope to try things,” says Peter Kirton, managing director of Esquires. “Provided they are not detrimental to the entire format and don’t have negative repercussions on the model, we tend to give them the heads up and support them with any ideas they might have.”

<p>Kirton explains that Esquires regularly holds committee meetings with its franchisees “to bounce ideas off them and hear their ideas”. One innovation that came out of these meetings was the company’s Designer Milkshakes, a step up from its traditional Italian milkshakes. It would be naïve indeed not to involve franchisees in such matters, Kirton suggests. “They have already invested substantially in their own business and it would be stupid not to take their ideas, discuss them and bounce them around,” he adds. “It is a resource to use; it is not just one to dictate to.”</p>
<p>Certainly, Kirton is a great advocate of those Esquires franchisees that have a certain, if restrained, entrepreneurial streak about them. However, he admits that the franchise model does make such people a fairly rare breed. “Most of them aren’t in that mode,” he says. “If someone is very entrepreneurial, they tend not to suit to franchising very well, but there is balance of people in the middle who are able to walk the tightrope between the two and they are great to work with.”</p>
<p>One thing’s for sure: McDonald’s wouldn’t be where it is today without its franchisees. And Kelly believes that any franchise that shies away from innovation – and fails to include franchisees as part of that – is seriously missing a trick. “Encouraging innovation in franchising is quite simply good business sense,” he concludes. “It makes a business more resilient and more responsive to its customers’ needs and for us, has been a key driver of our success.” <img decoding=

Adam Pescod
Adam Pescod