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Planning for Innovation with Your Franchisor

By: Bill Bradley

 

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Look ahead a couple of years… you’ve chosen the perfect franchise for you—let’s say a spa services franchise with automated mobile booking. It combines a luxurious boutique feel at check-in with automated services and a terrific automated email drip system that brings customers back frequently.

 
Sure, you had some challenges as you got your location ready and built your business. You feel confident now, secure in your knowledge of your local market, and ready to spread your wings. In fact, you’ve come up with some new, locally sourced, artisanal products that you know your customers will love. The extra income stream from retail products will be welcome, and you know that shoppers will come back for services when they need a refill.
 
You’ve negotiated favorable pricing and figured out a new layout for the spa. Maybe you’ve even placed orders with your new suppliers. Then, in a routine conversation with your franchisor, you share your excitement with this great idea.
 
Your franchisor says no. No, you can’t set up a retail area. No, you can’t sell locally sourced products. No, you can’t offer anything different from the other franchise locations. No, you can’t change the layout of your location.
 
Now what?
 
Nothing, probably, except frustration and disappointment. Chances are good that your franchise agreement already spelled out every “no” you heard, and you signed it.
 
Come back to the present, and be glad you haven’t actually built new displays for those forbidden products.
 
 
Now, as you talk with franchisors and make your decision, be sure to work out this particular issue ahead of time. Innovation is essential; a business that won’t change with the times is likely to lose out. Look at Friendly’s, an 80 year old restaurant chain that’s now filing for bankruptcy. Locations that were perfect 30 or 40 or 50 years ago have been bypassed by new roads, and diners’ tastes have changed. No matter how much their customers love them, the franchise is shutting down.
 
So talk about a plan for innovation.
 
  • Does the franchisor always initiate innovation, or will franchisees be able to make suggestions?
  • Do franchisees field-test ideas? What’s the process for initiating, distributing, tracking, and deciding on new ideas?
  • If franchisees don’t field test, who does? If the franchisor just gets ideas and tells you to implement them without testing, how comfortable is that for you as a prospective franchisee?
  • How often does the franchise typically roll out new ideas?
  • What kind of marketing push comes with new ideas?
  • Who covers the costs of changes?
  • Ask for some examples of innovative ideas the franchisor has implemented, and how they went. See how close the history of innovation in the franchise is to the answers they’ve given to your questions thus far.
 
Franchises range from companies that are dedicated to keeping their products and services fresh to companies that take a “Don’t fix it if it ain’t broken” position. Those that make an effort to stay cutting-edge vary in how much the franchisor kicks in to cover the costs of change, and in how receptive they are to franchisee feedback. You may favor one path or another… just make sure that you know up front what to expect.
 
This article was originally published by America’s Best Franchises
Published: March 5, 2015
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Bill Bradley

Bill Bradley

Bill Bradley is founding member and CEO of America’s Best Franchises, LLC.  Bill founded three financial services firms, Ocean Shores Ventures, Denali International and William Bradley Enterprises. In addition, to launching America’s Best Franchises in 2005, Bill orchestrated approximately 20 private equity transactions in excess of $31 million, and launched five specific purpose private equity partnerships.

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