When I stepped into a senior management role in 1999 to manage a national franchise, the (pre-existing) Strategic Plan that I reviewed to “get my bearings” as far as SWOT (Strengths/ Weaknesses/ Opportunities/ Threats) was concerned trumpeted a very clear message: “the chain stores are dominating the retail space in the N.Z. market“.

Why is it that where brand awareness and market share is concerned retail chains tend to consistently outpace franchises in most cases ? 

The answer lies in the relatively high level of compliance and unity that chains can achieve using a vertical structure; where once directors have made whatever governance decisions those decisions are translated as operational directives to management and management become duty-bound (obligated) to get on and implement those decisions across the company (i.e. across the country/ countries wherever that chain has representation). 

Whereas franchise operations that are structured more liberally than a “Pure Franchise” (i.e. Buying Group”, “Franchise-Cooperative” models) tend to suffer from:

a) High levels of resistance to change by internal stakeholders – particularly where the shareholders are also the franchisees.

b) High levels of resistance by strong-minded individual franchisees who are unwilling to embrace new initiatives.

c) Strong-minded franchisees remaining steadfast in their belief that they alone know what’s best for their particular franchise operation; and that there is no possible way that the input of others could improve their operation.

d) A general unwillingness among franchisees to invest appropriately in marketing – for the franchise operation as a whole to be “marketing-led” versus “production-driven”.

The result being that such franchise operations tend to evolve at a significantly slower rate than chains, secure a significantly lower market share than chains, adopt fewer new initiatives (e.g. technology/ practices) than chains – and at a slower rate, and experience a significantly lower level of brand awareness among target customers.

In my view and experience there are only two effective options/ measures in front of franchise directors that have any probability of elevating the commercial competitiveness of such a franchise alongside chains; being:

a) Split the franchisee population, as detailed in my earlier blog titled “When You Can’t Go Forward As A Whole, Divide and Conquer” (dated 6th Feb, 2018). 

and/ or 

b) Appoint objective strong-minded leaders (i.e. both governance and management) to take control of the franchise operation and steer it purposely without being influenced by the strong-minded individual franchisees who consider they know better, and who are prepared to apply consequences (i.e. enforce the provisions of the prevailing Franchise Agreement and/ or Company Constitution) in the case of either significant and/or ongoing franchisee non-compliance.

Remember, the intellectual property created to provide a franchise with comparative advantages will only realise value to the extent to which the franchisees are prepared to support such initiatives by using/ implementing what is provided to them. The quickest way for a franchise to dilute its commercial potential and restrict its ability to secure/ grow market share is when franchisees do not use/ implement what is provided to them as a means of achieving comparative advantage.