March 2009 Franchising World
 
Franchisors who use technology proactively and creatively will recover sooner than others.
 
By Dan Martin, CFE
  
When the clock struck midnight on Dec. 31, 2008,   franchisors around the country made a silent pact: No more looking back. No more whining about the previous year’s losses. No more cries of “Woe is me.”  
  
They shifted from a mindset of despair, to one of solution-seeking. Not magic-bullet solutions, but rather practical, realistic ways they could generate additional income and reduce operational costs for their franchise systems until external economic conditions improve. For many of these franchisors, technology has turned out to be a significant piece of their financial strategy. By taking proactive steps, they have made technology work for them, both in terms of revenue growth, and cost savings.
  
In many franchise systems, it may just be a matter of maximizing existing technologies, while in other cases, a minimal investment could be required, but would yield long-term financial results. Let’s examine a few examples of technology-driven money-making, moneysaving techniques for franchisors to consider.
  
Leverage Your Vendors 
When rolling out a new technology application, such as an extranet or a sales and reporting module, or even a chat room for franchisees, why not tie it to a preferred vendor sponsorship that brings you the dollars? The   application is identified with the franchisor, but sponsored by the supplier with a simple phrase that says, “New module powered by [INSERT VENDOR NAME],” along with their logo. The vendor pays the franchisor a monthly fee for the sponsorship, which in turn, the franchisor often uses to offset the costs of the technology. Typical sponsors for this program include major vendors for uniforms, equipment, food products, or almost any function conducted on a regular basis, such as a payroll vendor.  
  
Vendors will jump at the chance to spend a few thousand dollars to attend a franchise system’s annual conference so that they can promote their products and services to the franchise owners. Often following the conference, vendors complain to the franchisor that they didn’t receive enough face time with the franchisees. By associating a vendor with new technology rollouts, a franchisor is giving vendors the opportunity to get in the faces of franchisees on a daily basis, every time they use the technology. The vendors love the exposure and see a tremendous profit as most     often, the sponsorship phrase and logo will include a direct link to the vendor, where franchise owners can visit and order their products and services. 
  
In fact, nearly a third of IFX Online’s franchisor clients make back all the money they pay out in usage fees from these types of sponsorships. On average, a franchisor will generate anywhere between $200 and $2,200 per month through multiple vendor sponsorships for technology applications that franchisees are required to use on a regular basis.
  
Franchisors can also consider incorporating technology application sponsorships into their convention vendor sponsorship packages. Vendors already pay for different levels of exposure at the annual conference, so why not have a “platinum level,” where a vendor has the opportunity for an ad, a podium banner, and an animated ad on the extranet, customer relationship management, or royalty-payment system. Chances are, a vendor would jump at the chance of gaining that continuing exposure postconvention every time a franchise owner   logs in to the CRM or to make a royaltypayment or goes into a training module to take a course.  
  
With 10 sponsors on a rotating banner, a franchisor has created a significant revenue generating line item. 
  
Blog in the Bucks 
Create blogs, bulletin boards or chats that are vendor specific-vendor moderated, and invite vendors to moderate a discussion among franchisees about their product or service. The franchisor can promote the vendor discussion for 15 days in advance. When the discussion day arrives, a vendor can introduce its products or services or troubleshoot or field questions about existing products or services. In this way, franchisors can leverage their vendors to directly support and educate franchisees. Who better to do it than the vendor itself? A franchisor can display a vendor logo every day for two weeks to a month for $200, creating significant cost-effective exposure, compared to paying $2,500 once a year to get a booth at a conference.
  
The end result is a triple-win for all parties. First, the franchisor now has an additional, recurring source of revenue from the vendor. Second, the franchisee is better educated on the products and services he utilizes to run his franchise. The vendor obviously, benefits from increased use of its products or services, as well as the opportunity to ensure the franchise owners are educated. When a franchisee maximizes products and services, everybody wins.  
  
Reduce Convention Costs, Boost Revenue
Franchisors can significantly reduce costs by going paperless and implementing online registration for their annual franchisee conventions, saving on postage, printing and administrative expenses. Over the years, franchise companies have gone paperless in 99 percent of their functions, such as royalty payments and operations manual updates, but it’s amazing how many of them still send out massive expensive kits, sometimes five or 10 mailings of the same kit, for their annual conferences. Our company offers franchisors a way to utilize a convention registration module on their extranet where their agenda, facilities, hotel registration, speaker outline, online hype, daily updates and promotions are all available online. They can offer early-bird registration, pre-registration and on-site registration, offering franchisees and vendors discounts for registering early.
  
For some reason, many franchise companies still receive a fax registration form. They feel the need to do that, perhaps because that’s the way they’re used to doing it. On the receiving end, staff members have to key in the information that comes in on the faxes, which costs time and money. Franchisors can also turn their online registration for conventions into a revenue center by having a vendor sponsor the registration process. Franchisors can also use technology to help hype the convention. To encourage franchisees to attend the annual conference, the franchisor could display a snippet video on the online registration module that features highlights of the previous year’s convention, showing participants enjoying a presentation or socializing at a reception or social event. The franchisor can start promoting the next convention online as early as a few months following the previous year’s conference.   
  
Holy Savings: VoIP Technology and the “Batphone” 
Voice over Internet Protocol technology is resulting in considerable savings on a daily basis for franchisor-franchisee communications and training, while at the same time, giving franchise owners the feeling of an increased level of support from their franchisor.  
  
Consider this, during the best of economic times, franchisors have to support their owners. They need handholding. They need to know their franchisor is there for them. When economic times are poor, franchisors tend to increase their ongoing support significantly. Often, they aren’t telling the owners anything that’s new, rather they are just letting them know they are there for them, and creating a checklist on the phone of things they need to address. They enforce the idea that franchisees need to maximize their marketing now more than ever. This is no longer the corporate solution, it’s the tailored solution for the individual owner at their unit.
  
The irony is that the No. 1 way of supporting franchisees at the time when they need it most, face-to-face, by going out   to their locations, is unrealistic in terms of costs. With an e-mail or a phone call, a franchisee will “kind of” remember getting it, but the impact is minimal. Face-to-face contact is critical during tough times, but it’s also extremely expensive. The latest technology solution is using a voice-based video phone that is franchisee friendly, a plug and play, self-configuring, Web-based digital video phone for around $30 a month for unlimited calls. Use of the phone increases the direct impact––face-to-face communication––using the Web for live streaming video.
  
Use of this technology not only saves franchisors money, but it dramatically boosts the level of support of a face-to-face interaction, each and every time the franchisee talks to the franchisor, whether on the road or at the home office. It’s affordable, effective and franchisee friendly. Because it utilizes the Internet, a VoIPbased system can significantly reduce calling charges for local and long distance. Franchisors can also use the visual VoIP   based technology for training. They can patch to a large screen monitor and conduct group training sessions. The information retention is tremendous because of the visual impact. As a result of better training and consistent communication using this technology, franchisors are reporting increased revenues at the store level, resulting in an increased bottom line for both the franchisor and franchisee. 
  
It’s important to note the tremendous cost savings that VoIPbased digital video phones create for international franchise organizations, which can support international franchisees   around the world for the same $30 per month unlimited call fee. An international franchisor can use the same technology, at the same cost factor, for unlimited video/audio support and communications. They can go face to face with a master franchisee, for example, who may be 9,000 miles or more away on a regular basis.
  
Franchisors should take a closer look at the technology they have, and don’t have, and determine ways to leverage it to their advantage. There are many simple ways to maximize efficiencies, save dollars and drive revenues using technology.
  
While the economic wounds of the previous year may still feel fresh, it pays to look ahead. Franchisors who use technology proactively and creatively will recover sooner than others.    

 Dan Martin, CFE, is president and CEO of IFX Online. He can be reached at  dan@ifxonline.com  . 

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