Franchise Headquarters

1. Franchise Management Franchise Headquarters Franchise Operators Customers

2. Course Objectives • Explain What is Franchising • List the Various Aspects of Franchise Management • Describe the Elements of Franchise Promotion • Describe the Important Financial Documents for a Franchise • Explain the Rules of Cash Management for a Franchise • Explain the Processes in Franchise HRM • Explain the Training Administration in a Franchise • Explain Elements of Franchise Store Operations • Describe the Role of Strategic Management in Franchise Management • Explain the SCM Strategies for Franchise Management • Explain How to Measure Performance of a Franchise • Explain the Elements of Health & Safety Program of a Franchise • Explain Why Franchisee Should Build Relationship with Customers • List the Responsibilities of a Franchise Store Manager • List the Tips for Efficient Franchise Management

3. Introduction What do you think is common between all the companies shown on the screen? Look at the logos of a few companies given on the screen.

4. Introduction Yes, all the companies shown on the screen follow the ‘Franchise System’ of doing business. That is, all of the companies shown on the screen have associated with franchisees and have expanded their business to several countries across the globe.

5. Introduction ‘Franchising’ means the granting of a right or privilege to an individual or group. In today’s modern world, franchise includes business arrangements known as franchises, licenses, dealerships and distributorships.

6. Introduction Hence, a franchise includes a "product and trade name" franchise format in which the franchisor is usually the manufacturer of a product, which it wholesales to the franchisee for resale.

7. Introduction Also, there may be a "business format" franchise approach, in which the franchisee is usually not reselling a product manufactured by the franchisor. Under both formats, the franchisee is operating the business according to the franchisor's rules, methods, and systems.

8. Introduction You can understand that in any kind of a franchise format, it is crucial that a franchisee must learn how to manage his franchise business well. Let us learn about ‘Franchise Management’ in detail.

9. What is Franchising? Franchising involves a contractual arrangement between a franchisor and a retail franchisee. The franchisor may be a manufacturer, wholesaler or service sponsor. A franchise or the contractual agreement allows the franchisee to conduct business under an established name and according to a given pattern of business.

10. Aspects of Franchise Management There are various aspects involved in managing a franchise management. A franchisee must understand and learn these various aspects of franchise management in order to manage his franchise business well. The following are the various aspects involved in Franchise Management: Marketing & Promotion Administration & Finance Operations Customer Service 01 03 05 07 02 04 06 Sales & Revenue Human Resources Management Health & Safety Let us look at each in detail.

11. Categories of Expenditures • Fixed vs. Variable • Direct vs. Indirect Categories of Expenditures of a Franchise Fixed : Remains unchanged despite changes in related level or volume of activity. Example: Salary of permanent staff Direct: Clearly linked to a service Indirect: Cannot be clearly linked to a particular cost object Example: Administration cost, Security cost Variable: Such expenditures are volume dependent and vary in proportion to changes in level of activity. Example: Medicines, consumables, power cost etc.

12. Tax Reporting and Franchise Management Details of state and local requirements can be obtained from the state’s department of revenue and local officials. A franchisee must remit personnel income tax to the IRS on a monthly basis. State and local remittance requirements and schedules may vary.

13. Processes in Franchise HRM • Each franchise business works towards the realization of one vision. • The same is achieved by formulation of certain strategies and execution of the same, which is done by the HR department. • At the base of this strategy formulation lie various processes and the effectiveness of the strategy formulation lies in the meticulous design of these processes.

14. Franchise Performance Management System The Franchise Performance Management System can be divided into three broad sub-systems: Planning employee performance and development Monitoring employee performance and mentoring employee development Annual stocktaking

15. Training Program Training Program • Training Program: • The following are a few key points to be considered for conducting effective training of the staff at the franchise store: • The franchise store manager must conduct frequent training programs for the sales representatives, cashier and other team members to motivate them from time to time.

16. Strategy Evaluation in Franchise Management Strategy Evaluation is as significant as strategy formulation because it throws light on the efficiency and effectiveness of the comprehensive plans in achieving the desired results. The managers can also assess the appropriateness of the current strategy in today’s dynamic world with socio-economic, political and technological innovations. Strategic Evaluation is the final phase of strategic management. The significance of strategy evaluation lies in its capacity to co-ordinate the tasks performed by managers, groups, departments etc. through control of performance. Strategic Evaluation is significant because of various factors such as: developing inputs for new strategic planning, the urge for feedback, appraisal and reward, development of the strategic management process, judging the validity of strategic choice etc.

17. Vendor Management and Franchise Management The practice of hiring vendors has greatly increased and hence there is a need for both sides to sit down and discuss the modalities of the contractual relationship before committing themselves to the same. In this way, disputes over responsibility and accountability can be amicably resolved if the contracts are worded in such a way that there is little room for ambiguity.

18. Chances of Getting Referrals • Better Customer Perceptiveness 1 Building relationship with customers in current market trends is the most important aspect that a franchisee should focus on for customer retention. The following are some of the substantial outcomes of building a long-term relationship with the customer: • Chances of Getting Referrals – • It is always a cost-free advocacy by customers to provide referrals to a franchise when they feel satisfied and encouraged and when they have a healthy relationship with customers. These referrals or customer’s reference of other customers act like a piece of cake for franchisees as there is no cost and struggle involved in this. This could be treated as the best outcome of quality relationship for a franchisee. • Leads to Customer Satisfaction 2 • Leads to Customer Loyalty 3 5 6 7 4 • Growth in Revenue • Leads to Customer Retention • Cost to Serve is Low Let’s look at each in detail.

19. Role of Customer Loyalty in Franchise Management • It is very important for a franchisee to build loyalty among their customers towards their product or service. Loyal customers usually are the most profitable as they: • Form the bulk of the sales volume. • Cost less to serve because they are further up the relationship learning curve with your franchise. • Refer other customers and generate positive word-of-mouth promotion for your products and services. • Readily purchase new products introduced by your franchise. • Are receptive to up-selling (buying higher-priced versions of products) & cross-selling (buying other types of products). • Are the most forgiving when problems occur.

20. Role of the Franchise Store Manager Recruiting employees for the store is the franchise store manager’s prime responsibility. He not only has to hire the right candidates for the store but also train them for their overall development. He must ensure that all the employees (floor manager, department manager, cashier and so on) contribute to their level best for the effective functioning of the franchise. He must act as a strong pillar of support and stand by his team at the hour of crisis. It is his duty to update his team members about the latest policies and procedures of the franchisor.

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