Franchising World, January 2007 

If the Internet is used to foster open and honest dialogue, it will be an invaluable tool for franchise organizations. 

By Mark C. Siebert 

The franchise relationship has long been the lynchpin of successful franchising, but that lynchpin comes with a catch.   

In order to maintain the long-term health of any franchise system, the franchise company needs to act as a trainer and trusted coach.  At the same time, in order to maintain system standards, the franchise organization needs to enforce these standards, which puts them in the role of policeman and occasionally judge and jury.  And it is precisely this dichotomy that has been the root of many a franchisor-franchisee conflict.

Now, with the advent of the Internet, both of these roles have, in some respect, been placed on steroids.  On the one hand, many franchise companies view the Internet as a tremendous boon to franchise relations.  Intranet sites, blogs, chat rooms, real-time reporting and input, online training, the ability to monitor and compare system-wide performance and instant communication with franchisees through e-mails and e-newsletters–all of these advances have made communication faster and more frequent–and have unquestionably improved the franchise system’s ability to train and coach franchisees.

At the same time, the ubiquitous and sometimes intrusive nature of the Internet, combined with the franchise company’s need to maintain system standards, can rapidly transform the organization from the friendly beat cop into a much more menacing "Big Brother" in the blink of an eye.  Remote video cameras, real-time access to the franchisee’s POS system, unencumbered access to franchisee data, and “friendly spam” can turn the Internet into a too-easy substitute for dialogue, and create an “us vs. them” environment in which the franchise relationship is bound to suffer.

So what is the franchise system to do?

Trust is the Key
While franchisees and franchise organizations will invariably realize that not all of their motives are completely aligned, the key to successful franchise relationships is trust. 

The franchise system, of course, must trust that franchisees will pay royalties on a timely basis and to properly report revenues.  They must trust the franchisee to follow the system and comply with brand standards.  But because these elements of the relationship are so important, most franchise firms routinely follow the advice of President Ronald Reagan: “Trust, but verify.” 

But in an age where a pinhole camera can be purchased for under $100, when is the franchise system going too far with that verification?  The short answer: It is a question of openness and honesty.

For years, franchise companies have used mystery shopping to detect the under-reporting of revenues.  While more modern methods now supplement the traditional mystery shopper, the principles remain the same. 

It starts with full disclosure.  If franchise systems are going to use the mystery shopping method with franchisees, it should not be a mystery to them.  Likewise, let them know that as a part of the process of maintaining brand standards that certain electronic measures will be used.  A franchise organization has a right to know certain information, but access and use of the information that is collected, along with the motives for collecting it, should not come as a surprise to franchisees.  Hide what the system is doing and why, and it will foster the distrust that could fester into a much more significant conflict. 

To Blog or Not to Blog
One of the most notable aspects of today’s modern technology is the way in which it has accelerated the free flow of information.  As recently as 10 years ago, a change in the franchisor’s operations manual might necessitate a mass mailing of slip-sheet inserts for manuals across the country.  And if the franchise system wanted to introduce new processes and procedures, special training often would be provided during a series of regional meetings or, if it could wait, during the annual convention.  Today, those changes are often seamless and instantaneous with manuals updated online and communication about the changes being sent via e-mail and perhaps in a video file. 

But these changes have also resulted in some degree of strife for some franchise companies that perhaps are worried that all of this instant communication will somehow foment franchisee discontent.  And for this very reason, these same franchise organizations have been reluctant to embrace the technology that could help them to improve both system-wide performance and franchisee communication.

It is perhaps instructive here to remember that for years, this same philosophy was harbored by some franchise firms that felt that the creation of franchise advisory councils could lead to insurrection.  These franchise systems that perhaps years later found themselves confronted by independent franchisee associations often wished that they had been proactive much earlier in the process.

No franchise firm can hope to limit interaction among franchisees in today’s communication age.  But just as franchise firm-sponsored franchise advisory councils provide franchise organizations with a forum to interact with franchisees as they interact with each other, smart franchise systems are developing electronic forums that provide that same opportunity.  The latest tool: the internal franchise system blog.

Blogging has rapidly evolved from virtually nowhere into one of the most powerful communication tools in franchising.  As recently as 2002, it was reported that there were a total of only 13,000 blogs in the “blogosphere.”               

Three years later, that number was reported at 20 million, and, with 80,000 new blogs being formed every day, it is estimated that the number of blogs will surge to 80 million by the end of 2006.  And now blogs, short for “Web logs,” are rapidly replacing chat rooms and topic-oriented forums on franchisor-intranet sites as a means of fostering and documenting communication. 

The advantages to blogs are obvious.  Blogs can be used to capture and sort data on various topics of interest, and create a permanent searchable record of that data.  While a franchisee chat room is difficult to monitor in real time, an internal blog has the advantage of allowing the franchise company to edit (and yes, censor) franchisees.  And since blogs can be set up as internal blogs for invitees only, they provide the franchise system with a tremendous opportunity for data collection and assimilation.  Done right, blogs can even help reduce e-mail and can build a collective intellect within the franchise system.

Of course, one of the big fears with blogging is that franchisees will say things in a public forum that the franchise company would prefer to deal with in private.  But in a blog in which the franchise system controls content, the question then becomes how much control should be exercised? 

First and foremost, it is important to establish guidelines for any internal blog or forum.  Franchisees need to know what is allowed and what is not allowed.  Formal guidelines need to be established dealing with issues including allowed topics (avoiding personal issues, for example), language, legal liability, and so forth.  And, of course, the franchise system is well advised to have an attorney review its guidelines.

The next question is when to censor.   The first rule is that censorship should be a last resort.  Aside from the obvious distasteful nature of censorship, aggressive editing will erode trust in the forum itself and, by definition, in the franchise organization.  If franchisees do not believe that they can openly and honestly express their thoughts on different subjects, the vehicles will be seen as pandering to the franchise company and will have much less in terms of usage and value.

The Double-Edged Sword
One of the most wonderful–and in some respects frightening–aspects of today’s Internet society is the newfound ability to document virtually everything.  The fear, of course, is that today’s e-mail, chat-room conversation, forum post, or blog entry, may end up marked “Exhibit A” a year from now.  And how often has a well-intentioned e-mail blown up when a carelessly-turned phrase ignited some franchisee’s fuse?   

With this in mind, those who rely on the Internet for ease of communication must be especially cognizant of how important it is to be precise in what is said in written communication.  Given the permanence of e-mail and other written communication, it is important that the franchise system trains staff as to what should be communicated in writing and by whom.  Policies should be put in place to assure internal review and pre-approval of sensitive communication.  And again, written guidelines should be integrated into the franchise organization’s internal training program.  

On the other side, the franchise company should also take advantage of the newfound ability to collect information and to document.  Today, it is easy to document when an e-mail message is opened.  And electronic testing on the information that is received can document that it has been assimilated.  And electronic polling can be used to take the pulse of both franchisees and the marketplace. 

It’s All About Communication
Good franchisee relations start and end with good communication.  In the new age of digital everything, it can be all too tempting to fire off an e-mail to respond to a nettlesome issue rather than picking up the phone.  It can also be tempting to assume that technology can reduce the frequency of visits with franchisees in the field. 

Dialogue is the foundation of good relationships.  While the best franchise companies will leverage off of the Internet to supplement and document communications, they will not neglect to create vehicles for constructive dialogue.  Field support, annual conventions, regional meetings, ongoing training, and franchisee councils cannot be replaced by an Internet magic bullet without something being lost in the process.  

Ultimately, if the Internet is used to foster open and honest dialogue, it will be an invaluable tool for franchise organizations.  But use it exclusively as a shortcut or a cost-cutting mechanism, and communications and your franchisee relations will suffer. 

 Mark C. Siebert is CEO of The iFranchise Group.  He can be reached at msiebert@franchise.net.