You’ve chosen a franchise business opportunity, let’s say, and you can tell it will be a great fit for you. The business systems seem ideal, the offerings are just what your community needs, and you can easily see yourself doing exactly what the franchisor describes as the daily routine in the business.
Some franchisees find themselves in this happy position—and then the franchise “upgrades.” In other words, they make changes across the brand, and franchisees have to go along with those changes.
Franchisees who liked things as they were usually don’t have the option of refusing to make the upgrades a franchisor has planned. And they often have to bear some or all of the costs of the upgrades, adding insult to injury.
McDonald’s is one example among major franchise players. They added lots of items and promotions, and franchisees have not been happy. They’re having to make frequent investments in new equipment, they’re seeing their service slow down as customers cope with too many choices, and seeing too little return, according to some franchisees.
Panera is another high-profile example. A new survey found that fewer than half the franchisees were positive about their planned upgrades, which will require investments in new technology solutions. About 60% of those surveyed were either unclear about the changes or unhappy with them.
A business has to be prepared to change in response to market changes; businesses that won’t adapt to consumers’ changing preferences are not likely to succeed.
On the other hand, franchisees often are not consulted before upgrades are planned. Changes may not suit all market segments—and the investment they require may not come at a convenient time.
Think about how the company you’re considering handles changes and upgrades—and ask about it, too.
- How frequent are required upgrades? If the company believes in remaining cutting edge by making frequent changes and upgrades, decide whether that’s a plus or a minus for you. Knowing you’ll have support for staying up to date can be exciting… but some of us aren’t happy with frequent change. This is another case where knowing yourself can help you make the best choice for your future.
- Does the company share costs? Panera is sharing the costs of the upgrades it’s insisting franchisees make, while McDonald’s apparently is not. If the company doesn’t share costs, do franchisees have any choice on when they upgrade? FInd out the company policy. Some franchisees feel downright resentful when they’re expected to invest heavily in changes they didn’t think of. If you’ll be one of those franchisees, take that into account when you choose your franchise opportunity.
- Are the upgrades really upgrades? Ask about the most recent examples for the companies you’re considering. Do they seem to be improvements in the customer experience, or do they look more like marketing decisions or promotions? Would you have chosen to make those changes? If the advantages aren’t clear, ask about the thinking behind the changes, and about how well they paid off for the brand.
Knee-jerk rejection of real improvements can be a damaging mistake for a business, but it’s important to match your tolerance for change with the amount of change a given franchisor is likely to provide you.
This article was originally published by America’s Best Franchises
Published: June 4, 2014
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