5 Ways Technology is Revolutionizing Franchising

“In 2008, franchisors and franchisees were in survival mode.”

That’s according to Scott Thompson, an international franchise development expert whose resume includes executive-level positions at Tutor Doctor, Maid Right, Jan-Pro Cleaning Services and FranConnect. As the Great Recession came into full swing, few sectors were thriving, and the franchise industry was no exception. Franchisees were struggling to maintain their share of shrinking consumer spending, and franchisors were hard-pressed to pitch major investments to prospects in an increasingly uncertain economic climate.

Ten years later, the industry has not only bounced back from the Recession, it’s benefiting from a number of technological developments that promise to safeguard franchisors and franchisees from the next economic downturn.

“Take point-of-sale systems,” says Dawn Abbamondi, a marketing and brand development consultant at SMB Franchise Advisors*. “Ten years ago, most POS systems were hard-wired and complicated, and even the best ones were far too expensive for emerging brands. Today, we have options for real-time reporting, accounting integration and all other sorts of valuable metrics, allowing franchisees a level of control they never previously had.”

We asked Thompson and Abbamondi about the biggest technological advancements in franchising in the past ten years. Here are their top five.

1. KPI tracking

A franchisee location’s set of key performance indicators is among the most important data set a franchisor must monitor. That a franchise is only as strong as its franchisees is a long-held truism in the industry, and new tech platforms have made tracking KPI easier and more effective than ever before.

“A franchisor must have insight into the key performance indicators of their franchisees,” Thompson said, “and we now have software that gives us that visibility in real time. Not only does it allow them to monitor the health of their entire system, it lets them quickly provide support to the locations that need it. If a franchisor sends out a support rep to a local franchisee, they can then follow that up by tracking the recommended tasks, initiatives and marketing spends, holding the franchisee accountable and observing exactly how effective the site visits are.”

2. Advanced POS tech

New point-of-sale technology offers a host of benefits that extend well beyond the convenience of quick and easy payments, particularly when combined with other tech, like automated marketing and integrated accounting.

“A robust POS system combined with a back-end automated marketing system can determine how often a particular guest visits a store and then back-market at key intervals to bring them back to the store more often,” said Thompson.

“A POS system, ideally with a built-in CRM, and integrated accounting through QuickBooks or other software gives both sides of the brand’s ownership crucial insight into the store’s financials,” Abbamondi said. “The right grouping of software can help franchisees and franchisors get a sense of how, when and why they are performing well or poorly. That information can also be used by the franchisor for a more detailed Financial Performance Representation.”

3. Social media

The rise of social media has had a dramatic and celebrated impact on consumer marketing, and franchise brands have been taking advantage of the new channels in any number of creative ways.

“One of the fun things social media has enabled is geofencing, which lets you promote offers to customers who are nearby,” Abbamondi said. “The ability to capture impulse purchases is something I would have loved to take advantage of when I owned a retail business. There is all sorts of other engagement tech as well, like the filters that Snapchat and other social media platforms use. They make people laugh and have fun, and if a brand can do that while also providing a great product or service, they are going to win.”

But social media’s benefits are not limited to consumer marketing; savvy franchisors have used the same applications to open new doors in their development strategies.

“In 2008, social media was just starting to make an impact in marketing,” Thompson said. “Now it is universally considered essential, and it’s completely changed the way we reach and speak to our prospective franchisees.”

4. Mobile apps and online ordering

In the past ten years, mobile service options have grown from a novel perk to a baseline expectation among consumers. A take-out restaurant without an online ordering option can quickly get boxed out by its more mobile-friendly competitors. But mobile offerings are not beneficial only for the foodservice segment, and their value applies to operators as well as consumers.

“Online everything,” emphasized Abbamondi. “It’s so important today. Mobile apps and online platforms can help franchise owners save money on staffing while offering a new level of flexibility and freedom for customers to order, schedule or buy. The benefits for both sides are significant. Customers get more control over what they get and when they get it, and operators can plan ahead and capture valuable information from customers.”

“I love the online booking systems at Sport Clips* and Great Clips*,” Thompson said. “Customers can check in online and not have to wait in line to get a haircut. Fitness concepts like Orangetheory have consumer-facing apps that track appointments while also allowing guests to track their progress with each session, which is amazing.”

5. Back-of-house management

Cutting-edge inventory management tools have begun to close the unpredictability gap that has long dogged many industries, but particularly the foodservice industry, where margins are notoriously thin and even minor losses, if repeated, can have a dramatic impact on the bottom line. New software has allowed restaurant owners, as well as operators in a host of other segments, to achieve granular insight and comprehensive control over their inventory as well as virtually every other aspect of their back-of-house operations.

“The real-time reporting of key metrics, especially when integrated with accounting platforms, is one of the most important advancements available to franchisors and franchisees,” Abbamondi said. “No one has nearly enough time to do what they need to do when they own and manage their own business, so spending less time calculating trends, tracking inventory and managing throughout is freeing, and it allows owners to spend more time interacting with customers, creating positive experiences and driving sales. “