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I am writing a paper for my business economics class on international franchising and even though I’ve done my research, I am finding no answers. I don’t know how you feel about answering students’ franchise questions, but I hope you might take this one. My question is: how do franchisors monitor the management style of the franchisee, especially when they are overseas? If you have any information on this topic or could offer some direction, I would greatly appreciate it. Thank you.
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Well, first, we’re happy to answer all franchise questions, we have just reminded writers (students and otherwise) to give proper credit when our site is used for reference material. (We have had the feeling from time to time however that students have asked franchise questions in hope of getting back a decent paper. Mostly kidding.) Franchise questions such as yours touch some important aspects of sound franchise practice, so here goes.
First let’s look at control in general; a critical factor whether the unit is operated domestically or internationally. Continuity and uniformity are two adjectives that describe quality franchise operations, but those attributes do not come about by chance. They are the result of constant training, review, supervision and care. The best of franchises spend significant percentages of their people and financial assets to ensure similarity across their network and they do so for several reasons, not the least of which is customer satisfaction. Shoppers expect the same products and services in each branded location they patronize, and if they don’t get what they are looking for, they quickly shift to the competition. To complete the business cycle of profit at both the unit and corporate level, advertising promises must be kept and customers must be satisfied. Control is the major insurance for guaranteeing both, and therefore a necessity in every franchise. Now, whether or not that necessity is attended to is a different story. Why do some franchisors take care of this critical business element while others do not? Simple, the best have a long term view of their operation and they move in a very methodical way to on deliver quality systems. The marginal and poor franchise companies either don’t care about network quality or lack the wherewithal to achieve it. It takes time, money, desire and know-how to provide sound training and support, which in turn produces control and a quality brand. In a nutshell, control is not just about a contract, it is the result of attending to numerous elements that reflect the franchisor’s personality, character, organizational skills and pocketbook.
Are there exceptions to strict operational controls in franchising? Yes, of course. Traditionally, retail and food franchises require the most uniformity and control. But what about personal and/or professional services like accounting and bookkeeping? Even within the same franchised bookkeeping network you will find a variety of software programs, client types and focus of services. The point is that control is critical, but quality franchising it is a function of determining which items must be controlled.
OK, switching over to your foreign licensing concerns, I suggest that you look to the same elements above and compound the control problem with language, distance and customs. Good management systems and adequate financing can provide quality training, support and control in foreign activities; it is just more difficult. But in most cases, the overseer is an entity that has purchased (for significant capital) the rights to develop that region or that country. Their investment would be in jeopardy if the franchisor’s system was compromised. The franchisor provides training and supervision of the developer. But, the key ingredient is still the franchisor’s desire, ability and need to create and enforce control systems.
Lack of monitoring and control often leads to misuse of a franchised system, and it is an important issue. As is true in all things, the best, the brightest, and the most concerned with long-term success, will create and use adequate programs to reach quality goals and objectives.
I hope this helps you.