Catch The Wave

Can We Talk?

Once you get into a franchise system, the power of the Internet seems much more focused and advantageous to both franchisors and franchisees. The Internet is unrivaled when it comes to facilitating communications, a benefit that's already infiltrated the world of franchising.

Indeed, some of the larger franchise systems are taking full advantage of the extranet capabilities of the Internet. An extranet can be loosely described as protected information that can be accessed through the Internet by those who hold the proper password. For example, the franchisor Mail Boxes Etc. regularly communicates with its franchisees via the Internet, and franchisees can even access operations manuals by using their password. In the future, when the necessary bandwidth is available, it's certainly possible that franchisees will watch training videos and franchisor presentations on the Internet. I've worked with a budding franchisor who intends to place digital cameras in stores to assist franchisees in making crucial decisions when bidding on used merchandise. Big Brother paranoia aside, these types of applications may turn out to be the best utilization of the Internet for franchising.

Speaking of Big Brother, one piece of information that a franchisor must now disclose in its UFOC is whether it has the unfettered right to access a franchisee's computer system. The idea of permitting the franchisor free rein over your hard drive could be a little disconcerting; however, the benefits are tangible. Now, by using Internet or modem access, franchisors can automatically download point-of-sale information, customer databases and completed financial reports. This not only permits the franchisor to perform its job of supporting the franchised business, but it also means less work for the franchisee. According to Lee J. Plave, a franchise specialist and partner with Rudnick, Wolfe, Epstien & Zeidman in Washington, DC, "Franchisor field reps can use data instead of wasting time deriving it, which permits human interaction at a higher level." On the other hand, some franchisors keep a digital key to the operation of your software and can remotely lock you out of proprietary software. So now the digital hammer can be flung from afar.

But the Internet doesn't just give strength to the franchisors. Not surprisingly, the Internet has greatly improved communications between franchisees, providing them with a low-cost way to coalesce and the unprecedented power to help each other.

One of the best features of a franchise system is the ability to rely on your fellow franchisees to provide insight into your daily dilemmas. E-mail within an extranet provides a low-cost way to transmit ideas and discussions. In one situation I know of, the franchisees in a system began a grassroots effort to force systemwide changes upon a franchisor. As the e-mail messages began to flow, franchisees reiterated their concerns for the others to see. Eventually, the franchisees began to learn that most of them agreed something had to be done, and the group of comments was eventually forwarded to the franchisor.

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This article was originally published in the January 2000 print edition of Entrepreneur with the headline: Catch The Wave.

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