Why it works to get franchisees involved
How can a franchisor engage franchisees in decisions affecting the network?
One of the strengths of franchising from an investment perspective is that it takes a lot of the risk out of starting and running a business. Franchises offer a tried and tested business formula often combined with a strong brand and support network. The downside of this can be that franchisees have less control over decision-making in their franchise and in the wider business.
MERCHANDISE ADVISORY COUNCIL
At Bedshed, we believe we’ve found a balance that is mutually beneficial for our franchisee partners and the broader business. Our franchisees are intrinsically involved in Bedshed’s purchasing decisions. Like many franchises, we have a Merchandise Advisory Council (MAC), which is made up of a mix of elected franchisee representatives and corporate staff.
The MAC participates in at least two overseas buying trips each year to examine stock and select the products that make up the Bedshed range. Non-MAC members can attend the trips too should they wish. Bedshed funds the cost for MAC members to attend the trips and also provides a significant subsidy towards the travel costs of other franchisees that attend.
There are a number of benefits that come from involving franchisees in purchasing decisions.
1. Understanding customer demand
In our business, franchisees are on the front line – they know exactly what their customers need and want. The whole business benefits from leveraging this knowledge to ensure purchasing is in line with the demand from Bedshed’s customers around the country.
2. Franchisee satisfaction
At Bedshed, we’ve also seen greater satisfaction levels from our franchisees as a result of having a say in decisions that impact their business. Independent research conducted in 2012, showed Bedshed franchisees were entirely satisfied with the level of consultation they experienced and very satisfied with the sense of shared identity they felt with the broader business.
In comparison, the same survey concluded across the wider industry found the average franchisee felt only slightly satisfied with the level of consultation they experienced in their franchise system.
Our inclusivity is one of the things that differentiates Bedshed from other franchises. Our franchisees have greater ‘buy-in’ and a stronger sales proposition from communicating directly with suppliers.
3. More effective engagement with suppliers
Interestingly, we’ve seen better results from discussions with suppliers about challenges with timely supply or volume when franchisees are involved. There’s a naturally stronger imperative for our suppliers to address the issues when they’re talking directly to the small business owners being affected. Our franchisees offer a more personal point of view, which is balanced by the franchisor perspective in a way that resonates much more strongly.
4. Franchise point of difference
Overseas business travel is a major selling point for prospective franchisees too. Bedshed recently commissioned a whitepaper comparing investment in a franchise to going it alone as a sole trader. The report found that Bedshed franchisees placed a very high value on the opportunity to travel overseas for business purposes. Further, the social element that naturally results from these trips helps franchisees strengthen their network and get more out of their business relationships.
A model like this doesn’t work for all franchisors, however there are plenty of other ways to consult franchisees on supply chain and other aspects of the business. For example, in an FMCG franchise it would be useful to have franchisee input on food wastage and whether the delivery of ingredients is improving or reducing efficiencies.
There are many other ways franchisees can contribute to business decision-making. Most franchisors hold frequent face to face meetings where key issues are tabled and discussed. Technology also offers many new opportunities to share ideas on ways to improve and streamline business practice.
As with anything, there are also potential downsides to involving franchisees in decision-making.
In some cases, franchisees find it difficult to broaden their perspective beyond their own business and what they’ve seen on the balance sheet in the past month. At Bedshed, we address this by placing the emphasis on the whole year results and what’s happening in the entire network.
When working with a large group, as you inevitably do when you involve franchisees in the decision-making process, there’s also a risk that not everyone will be able to have a say. It’s important to implement a process whereby all opinions are considered, regardless of how loudly they are voiced.
Some franchisors are limited in how much they can involve franchisees in decision-making and others tend to avoid it because it doesn’t suit their business model. At Bedshed, we’ve found there are a whole host of benefits for the franchisor and for franchisees and we will continue to take a collaborative approach to purchasing decisions in our business.
Gavin Culmsee is chief operating officer of Bedshed, one of Australia’s largest specialist bedding and bedroom furniture franchises with a network of more than 30 stores across the country. Bedshed has grown steadily since it started in Western Australia in 1980 and is currently expanding on the eastern seaboard.