Franchising and the Internet: "Real World" Applications that Franchise Companies Actually Use
By Daniel P. Martin - President, IFX International Inc.

Internet technology has literally changed the world. In particular, it has changed the way we do business, inclusive of the way we market products and communicate with each other. These applications represent common uses of the technology available to a wide variety of companies, not the least of which are franchise companies. However, unlike their non-franchised counterparts, franchise companies must consider the "real world" of independent franchise owners, many of whom gasp at the advent of anything that has to do with a computer, let alone the Internet. As such, franchise companies must address certain practical, political, marketing and legal issues associated with the franchisor-franchisee relationship prior to implementing new technologies among the group as a whole. Whereas non-franchised companies can often implement new technologies without having to consult with their user base first, franchised companies typically cannot, or should not. Although the Franchise Agreement provides the franchisor with the option to mandate the implementation of system modifications at the franchisee level, it is safer to implement voluntary modifications that are viewed as beneficial to all franchise owners, as well as the company.

It seems like the number one question asked most by franchisees of their franchisor is, "What have you done for me lately?" It ranks slightly ahead of, "Why am I paying a royalty?" All kidding aside, most franchise companies are turning to the latest Internet technologies in an effort to increase the potential for success at the franchisee level. The Internet offers franchisors an opportunity to implement new applications that are both tangible and viable to real franchisees operating in the "real world". Unfortunately, developing applications that are truly viable and beneficial to franchisees can be a rather daunting task. There are lots of cool Internet-based applications out there. Which ones will be most beneficial to your franchisees? Which ones should you implement first? How can you position your organization to take advantage of current and future Internet technologies? All of these questions necessitate different answers and there is no singular "all-powerful" source franchisors can contact to obtain the answers they need. The Internet is still in its infancy with non-franchised companies. It is virtually embryonic as it relates to the franchise industry. About the only thing anyone really knows for sure is that in order to benefit from applications that utilize the Internet, you must have access to the Internet.

The Prime Directive

Killer Internet applications are great, but they are absolutely worthless if no one uses them. Without a sufficient base of users (i.e. franchisees, prospective franchisees or customers) on the Internet, they will not be utilized. Moreover, you will likely need a large number of users utilizing your killer "app" to make it worthwhile. The formula is simple: No Internet + No Users = No Bueno!

Whether your franchise organization currently has an Internet plan or not, you know that sooner or later you'll be utilizing the Internet in one form or another. If you believe that the above formula is valid, then the Prime Directive (with certain apologies to Gene Roddenberry) should be to get as many users online as possible, as soon as possible. Although it is a never-ending task, once the Prime Directive has been achieved, you will have laid a foundation for countless Internet applications designed to be utilized by an identifiable group of users, all of whom have a common thread relating to your organization and/or your concept. Once the Prime Directive has been initiated, there are several Internet-based applications you can implement which are ideally suited for domestic or international franchise organizations. These applications, which range from commercial websites to online communications systems to full-blown e-commerce sites are currently being implemented by a wide variety of both startup and established franchise companies in the United States and abroad.

Commercial Websites

These days, the overwhelming majority of franchise companies have commercial websites. However, back in 1996 less than 15% of US-based franchise companies had websites. The big push for websites over the past few years can largely be tied to a website's ability to promote the franchisor's program to potential franchisees surfing the web. To a large degree, websites simply recreated a franchise company's brochure and, in part some of the elements of their UFOC. These "franchisee solicitation websites" reduced postage and printing costs by eliminating the need to send a full marketing kit to a franchisee prospect upon first contact. Franchise companies began directing prospects to their websites in order to view detailed information about their offering. In addition, websites ended up assisting in the qualification process by requiring a prospect to submit an electronic form or application in order to receive additional information.

Rick Swalwell, Vice President of Marketing & Communications for Medicap Pharmacies, Inc. (www.medicaprx.com) affirms the web's franchise marketing lure. "Two and a half years ago, we felt that we could utilize the web as a cost-effective lead generator designed to attract pharmacists surfing the web looking for investments." As a result, Rick notes, "The cost to develop and maintain our website was justified with the sale of a singular franchise. Since then, we've expanded our website to include the promotion of individual franchised locations to potential customers, as well as our franchise offering to potential franchisees."

Whereas websites a few years ago appeared to emphasize excessive animation, utilizing a "bells and whistles" approach to attract prospects, modern franchisor websites are simple and to the point. Content and speed are paramount. In addition, most franchise companies are focusing on the dual marketing approach of targeting franchisee prospects and potential customers equally. Western-Sizzlin' (www.western-sizzlin.com), MaxCARE (www.maxcarecleaning.com) and Wienerschnitzel (www.centercourt.com/wienerschnitzel) all utilize a clean, direct approach to attract potential franchisees and potential customers.

AmeriSpec, Inc.'s Chief Operating Officer, Steve Wadlington indicates that the demand for information on AmeriSpec's franchise program, coupled with the demand for AmeriSpec services, necessitated the development of two individual websites. AmeriSpec promotes its services and its 312+ locations on one site (www.amerispec.com), and it promotes its franchise offering on another site (www.amerispecfranchise.com). The result is a simple, focused approach for each independent marketing direction that Steve feels works well to fully inform potential customers and potential owners.

Unit Locators and Personalized Franchisee Websites

Commercial websites represent a viable and cost-effective application utilizing basic Internet technology. Franchisors understand this, and so do franchisees. As a result, more and more franchisees are developing their own websites, which is a good thing. Unfortunately, websites can be expensive and many franchisees feel that they should have a personalized website paid for by the franchisor or paid for out of the company's Regional or National Advertising Fund. Franchisees who have taken it upon themselves to develop their own personalized websites often end up with poor quality sites that do not necessarily reflect the professional image and marks established by the franchisor. Problems arise when franchisees develop their own personalized websites, utilizing the franchisor's image and marks, without obtaining prior approval normally required of standard advertisements or brochure material. In this case, advertising approval procedures outlined in the Franchise Agreement have not quite caught up to the technology, failing to include verbiage incorporating websites or other Internet-base advertising and marketing applications in the approval process.

In an effort to maintain continuity among the organization as a whole, many franchise companies have incorporated Unit Locators (mini-search engines) into their commercial websites to assist customers in finding the closest franchised or company-owned location. These unit locators often link to personalized mini-websites displaying local photographs, information, maps and coupons specific to each individual location. As a tool for assisting customers in finding the closest location, they are very useful. As a tool for controlling website design standards at the franchisee level, they are also very useful. AIM Mail Centers' website (www.aimmail.com) takes this application one step further through the use of a user-friendly "front end" interface that AIM's Chief Executive Officer, Michael Sawitz can use to create new franchise location listings, as well as personalized mini-websites, using a password protected template. Without any HTML or web design experience, Michael can enter detailed information for his 70+ locations, select which coupons customers can redeem on each mini-website, and associate each location with a specific zip code for search purposes. A year ago, the technology available at that time would have required AIM to hire a full-time web designer to develop and maintain a Unit Locator/Mini-Website Program. However, utilizing a simple, browser-based front end, anyone at AIM with the right passwords can design and maintain the program without the need for programmers or programming experience. Moreover, Michael can update any or all of AIM's mini-websites and search criteria "on the fly" in a matter of minutes.

Incorporating a mini-search engine and individual mini-websites into your standard commercial website represents an excellent "real world" application of Internet technology. Standardizing a simple, front-end template format ideal for non-programmers opens up this type of application to a much larger group of potential users, which in this case consist largely of non-technical franchise management personnel. MaxCARE, AIM Mail Centers and Western-Sizzlin' all incorporate unit locators and mini-websites, utilizing front-end template technology, into their commercial websites.

Intranets

Intranets represent Internet applications that are ideally suited for the franchise industry. Essentially, Intranets are secure websites available only to authorized users with exclusive passwords. Intranets provide franchisors with a private platform with which to distribute information to franchisees via the Internet.

Intranets can vary in functionality and complexity. Some Intranets simply consist of private e-mail networks that provide franchisees with a unique e-mail address to send messages to and from the franchisor's corporate headquarters, or to other franchise owners. More complex Intranets contain discussion forums or bulletin boards where franchisees can share ideas, comments, questions and answers with other franchisees in a singular forum. In addition, many Intranets these days include document forums where franchisees can go to view print or download the latest operations manuals, marketing materials or newsletters. CarpetMAX (www.carpetmax.com) has an Intranet system with multiple document forums, which can be segmented for individual or group viewing. Referred to as "Online Libraries", they can be filtered to grant groups of users such as the Franchise Advisory Council, Convention Committee or Product Review Board exclusive access to documents and information relative to their specific group.

Intranet technology provides franchise companies with an opportunity to significantly reduce printing, postage and paper costs normally associated with the dissemination of information to a dispersed group of individual franchisees. However, beyond the reduction in administrative costs, Intranets provide for instant transmission of information. Rather than wait three or four days for franchisees to receive the latest Approved Vendor Listing via regular mail, franchisors can now transmit the listing via their Intranet in seconds. Further, some Intranets incorporate verification features designed to confirm a franchisee's receipt of important or litigation-sensitive information.

Instant transmission of information via an Intranet, as opposed to conventional methods, allows franchise organizations to capitalize on time-sensitive opportunities as well. Denninghouse, Inc., franchisor of Canadian-based A Buck Or Two! stores (www.denninghouseinc.com) is planning on utilizing their Intranet to instantly transmit product close-outs and excess merchandise announcements directly to 250+ franchised locations in seconds. Prior to implementing an Intranet system, Denninghouse, Inc. did not have a system that could efficiently transmit product purchasing specials offered by vendors, especially if the specials were limited to a two-week window of opportunity. Now, the company hopes to capitalize on the instant transmission capabilities of their Intranet to provide their franchisees with product specials available within a remarkably short timeframe. Ultimately, capitalizing on these types of opportunities will result in increased sales at the franchisee level with increased royalties recognized by the franchisor.

AmeriSpec, Inc.'s Steve Wadlington notes that, "Our Intranet provides us with the opportunity to leverage communication and information flow in a timely and efficient manner across multiple time zones." In addition, Steve indicates that AmeriSpec utilizes the "Prospect Preview" capabilities of their Intranet system for franchise sales presentations. "We incorporate a thorough explanation of our Intranet system, known as the "B.O.S.S." (Business Owner's Support System), into our Presentation Day outlining specific support benefits specifically designed for AmeriSpec owners.

The multiple discussion forums feature of AmeriSpec's "B.O.S.S." has dramatically improved the company's ability to develop ideas which result in the implementation of specific programs or policies. Wadlington notes, "Our group discussion forum has allowed us to go from comment to concept to deliverable in as little as two weeks. In fact, we can point to programs and policies that were formulated entirely on our Intranet system utilizing online input from both owners and management."

In an effort to meet the Prime Directive for user participation on their Intranet system, GNC Franchising, Inc. (www.gnc.com) conducted a "Name our Intranet Contest" within one of their online discussion forums available to all General Nutrition Centers franchisees. According to Melissa Harrell, Manager of Marketing and Communications at GNC Franchising, Inc., the company's base of Intranet users increased as a direct result of their contest. The winning name of name of "Genesis" (General Nutrition's Electronic Support Information System) was announced at GNC's national convention in May of this year.

Online Product Ordering Systems

A growing number of franchise companies have developed e-commerce systems designed to accommodate online ordering of equipment, inventory and supplies over the Internet. However, rather than target e-commerce directed toward customers, many franchise companies have initiated online wholesale purchasing programs which provide franchisees with the ability to order items directly from approved vendors or the franchisor itself. As an interim phase of building a true retail-based e-commerce system, a wholesale product ordering system takes advantage of the existing purchasing relationships between franchisees and vendors.

MaxCARE, Purified Water To Go (www.watertogo.com), and Medicap Pharmacies, Inc. have developed, or are in the process of developing e-commerce applications to be utilized by their franchisees and vendors, and ultimately, their growing base of retail customers. MaxCARE franchisees can purchase wholesale products and supplies via the company's Intranet system and recognize wholesale pricing reductions of up to 20%. MaxCARE's Senior Vice President, Phil Green notes, "Our franchisees can access inventories and order products and supplies whenever they want using an ordinary computer and an Internet connection." Phil adds, "In addition to better pricing, we're able to offer better service, free freight, same day shipping and greater convenience. Plus, we have significantly reduced our costs in the process."

Medicap Pharmacies' upcoming "Virtual Pharmacy" is designed to accommodate retail customers interested in ordering refills of prescriptions initially filled at a Medicap Pharmacy location. This online application accommodates customers anytime of day or night and provides an extremely beneficial service to customers looking simply to purchase refills for prescription drugs. In addition, the company is moving toward an online "Health Library" which customers can utilize to research and purchase a wide range of books on health and fitness, all at savings of 15% or more.

These are just a few examples of "Real World" Internet applications being utilized by a wide variety of franchise companies. In each case, you'll note that it is not necessarily the technology itself that makes a particular application work. Rather, it is the manner in which the technology is applied at the individual user level that makes them successful.