Hughes

The Technology Problem in Franchising

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Franchising has a technology problem.

The argument is quite simple:

  1. Business today is being driven by technology. 
  2. Technology is complicated. Franchisees need help with their technology. 
  3. Franchisors want to limit the requirements imposed on the Franchisees. Franchisors also want to limit their liabilities. 

As a result, many franchisors are taking a hands-off approach, leaving the franchisees to fend for themselves when it comes to technology.

The hands-off approach is not good for the franchisors because every time there is a data breach, the entire brand suffers. Franchisees shouldn’t be left to make independent decisions on critical elements, such as whether to offer guest Wi-Fi, which kind of guest Wi-Fi to offer, and how to operationally support guest Wi-Fi. A complete technology strategy should be widely deployed to ensure a consistent experience with the brand. Instead, many franchisors are reluctant to impose any technology requirements on their franchisees other than those that are necessary for fear that future franchisees will choose a competitor with fewer obligations.

The hands-off approach is not good for the franchisees because technology impacts every aspect of the business, from customer experience to employee engagement. Every time a screen goes dark, a Point of Sales transaction takes too long, or mobile order fails, customers are disappointed. Franchisees are routinely failing to fulfill basic PCI requirements. They aren’t reviewing their logs daily, training their employees in network security, or properly filling out self-assessment questionnaires. As a result, when a breach occurs, the franchisee does not qualify for safe harbor and is held fully responsible for damages.  

Managers and employees are often dependent on fully functional access to cloud applications to create a consistent brand experience at every location. When complications with cloud access arise, the franchisee is left scrambling trying to fix something they don’t have the expertise to repair, without the scale to influence carrier priorities. 

New thinking is required. Instead of a minimalist posture, franchisors need to be fully engaged in leveraging technology to enhance the customer experience and drive employee engagement. In a market where customer experience is often defined by technology, franchisors depend on a technology strategy where the franchisee must know what to do. 

Technology solutions must be aggressively vetted and operationally managed. Every aspect should be considered, not only from a customer experience perspective but also from an operational perspective for efficiencies that may be gleaned from the collected data. High‑availability strategies must be employed to avoid the “sometimes it works, sometimes it doesn’t” syndrome. Careful consideration must be given to achieve a consistent customer experience across a large-scale, nationwide deployment. It is naïve to suggest that customers may only get a satisfactory experience at sites with adequate and affordable Internet connectivity, when it is commonly understood that a significant portion of a nationwide deployment will not have access to adequate bandwidth. More deliberate effort must be applied to solve this well-known problem. 

Instead of relying on ambiguity to avoid liabilities, franchisors should provide executive-level guidance and qualify technical resources for franchisees to choose. Franchisees vary widely in their technology support needs. While some may have the internal aptitude to succeed with minimal support, most will require the assurance that comes with a trusted service provider. Franchisors must have a strategic technology plan to align with the full spectrum of business needs so that franchisees are not paying for unnecessary services. 

Technology is too vital to leave to chance. An enormous gap exists between many franchisees’ ability to support technology and what is required to succeed with technology. Franchisors and franchisees need to reconsider the prevalent hands-off approach to developing, implementing, operating, maintaining, and supporting business technology.

To learn more about Hughes’ solutions for the franchise market, please visit: https://business.hughes.com/industries/franchise