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When evaluating a franchise system, many do not understand what questions to ask related to technology. While the answers can sometimes be even more confusing, an appreciation of the platforms used is critical in today’s rapidly changing tech landscape. I have had the privilege of identifying and developing solutions for both franchisees and franchisors and would offer the following:
1. Are the systems developed in-house, outsourced, open-source, or out-of-the box? There are arguments for each of these related to control and costs. If the systems that support franchise operations are developed by the franchisor in-house, what kind of overhead does the IT department require? If open-source solutions are used, who does the customization and support? If outsourced, who has control of the software? Are there unique business model challenges that are not likely to be met with an off-the-shelf application?
For each of these, how often are updates and upgrades made available? With each approach, the expectations related to costs and support should be different. These types of questions will show the balance between flexibility and expense.
2. What are the initial and ongoing costs of operating and licensing the system? A careful evaluation of the hardware, software, maintenance and support costs will help prevent unwanted surprises. As well, the terms of any related contracts should be understood.
3. Are the various applications integrated or is the information in silos? For example, does the POS system have the capability to directly interface with your back-end accounting software? An understanding of how the various systems talk to each other will help someone assess how flexible the solution is that the franchisor is providing. A comprehensive solution should be an integrated solution.
4. Does a franchisee have visibility to store sales information when not onsite? What visibility does the franchisor have and what is the information used for? With today’s web-enabled applications becoming the standard, remote visibility to critical key metrics should be expected even for a single unit owner. Understand how the franchisor plans to use store data for example, if they have the access. Automated royalty reporting is common, but the potential for operations support and help with marketing initiatives could provide a boost for the franchisee.
5. What advantage does the system have over a competitor’s system? How does the franchisor use the technology to give franchisees an edge? If the franchise salesperson cannot answer this, ask the CIO. Someone should be able to articulate the benefits of their solutions over the chain down the block. Odds are that the new competitor opening up down the street will have the latest and greatest. The end-customer experience is likely to be different and the owner will have more accurate information available to make better business decisions.
Certainly there are there other topics to inquire about including security and ownership of customer data. All of these questions should assist in establishing a comfort level and expectation when looking at the various solutions that a franchisor is offering.