• Aug 2017

Franchise Code of Conduct for Change

Franchise Code of Conduct for Change

The science of franchising demonstrates valuable lessons in leadership. Change and innovation are the DNA of every business system in today’s world and the franchise systems are no different. All franchise businesses today need to digitally enabled, GST compliant on one hand, and on the other hand, need to face competition from global franchisors and also deal with a non-loyal customer, who wants things faster, better and cheaper. Without introducing ongoing changes to its products, services and operating systems, franchise model will be struggling for survival. The heart of the matter is not why should we change, rather it is how should we change. The science of franchising is a combination of Physics, Chemistry and Maths (PCM) that both the franchisor and franchisee should understand and deploy to make the system successful.

The PCM Principle of Managing Franchise Change:

  • Physics of Franchising: It can find its closest affinity in the Newton’s Law of Motion, that says an object at rest remains at rest, or if in motion, remains in motion at a constant pace unless acted on by a net external force. Franchising is also like that. We need external force to bring a new path to system and to put a new direction to it. And in every 2-3 years, the system would need this external force to change the path. Over the years, in every franchise system inertia starts building up – unmotivated, underperforming franchisees, projects addled by overplanning and under execution, declining customers and lack of freshness in a brand. It takes come external and irregular effort to change that current speed and direction. The business needs a ‘Pivot’ to bring in new speed and direction in the franchise brand.
  • Chemistry of Franchising: Franchising is a people-driven business and there has to be fabulous chemistry between the franchisor and the franchisee to drive change in the system. The starting point is how the franchisor should get franchisee buy-in and commitment to change. It is a question of balance between the change that one chooses to see as opposed and the change which is enforced by the franchisor into the system. It calls for balancing the equation between franchisors’ excitement, enthusiasm and motivation with franchisees suspicion, fearfulness and resentment. It calls for common love and commitment to see that the brand grows and thrive with their individual efforts and expertise.
  • Maths of Franchising: The business of change should make financial sense for each stakeholder, and only then the entire ecosystem can work correctly. The franchisor has to figure out how to achieve change without putting too much financial burden on the franchisee. Even those franchisees, who understand the need for change, may still baulk at actually implementing it because the costs are perceived to outweigh the benefits. Some franchisor overcome franchisee fears about the costs of change by partially or fully funding the change themselves.

    Overall, it calls for building change-friendly cultures to overcome resistance in relation to change. Globally organizations have introduced a new position called chief innovation officer, whose job is to transpire change and make it tangibly beneficial to both franchisees and franchisors, and demonstrate the path from old to new, then implementing change programmes will become much easier for franchisors.

Franchising can help in creating larger scale without heavy investments in retail space and business structure. The Financial Times-Oct, 2014

Mr. Marya expressed hope that $500 Bn. retail sector will get a positive boost with a stable government after the current Lok Sabha elections. Statesman April 29th, 2014

White Indian restaurant brands have done well nationally, only a few of them have been successful in international markets. The presence of Indian brands/ restaurants outside the country is very fragmented. The Economic Times April 26th, 2014

In categories like electronics, there is a need to develop expertise in handling after sales trouble. With new assortments there might be disappointments and ensuring the quality would be a tall task. Business Standard-April 25th 2014

Growing at 25% annually, India is becoming the world's largest franchising marketplace after USA. New Today Chennai-Oct, 2014