New Insights to Solve the Omnichannel Paradox

Zhanna Kremez is a PhD student at Griffith University who has been investigating eCommerce in the franchising sector. I first met her at a workshop for social scientists in 2012 and was impressed with her enthusiasm for understanding how people work together. We subsequently conducted a joint research project on how franchisors are approaching the digital world, particularly how they are working with their franchisees in this space.

In February 2012 we surveyed 50 franchisors and discovered only 36% were actively taking customer orders online. The other 64% were either pilot testing their online strategy, considering their options or had decided eCommerce was too complicated. I was concerned at these findings, as it showed the franchising sector was lagging in this area of opportunity. So FRI organised a Bricks & Clicks Forum to explore how franchisors could improve their performance. Sixty senior franchisor executives participated in a productive day of discussion and sharing.

Four years on, Zhanna is preparing to submit her PhD thesis, and the FRI team are about to run a second Bricks & Clicks Franchisor Forum. So I caught up with Zhanna to find out what she’s since discovered.

Fortunately a lot has changed, with most franchisors now engaging actively in the online and digital space. This is increasingly being referred to as omnichannel, meaning the customer should be able to buy from your brand seamlessly on any digital device, by phone or by visiting a bricks and mortar store. However, despite higher levels of engagement, franchisors and franchisees are still facing significant challenges with their omnichannel strategies.

Six observations

Imbalance between the needs of franchisors, franchisees and customers. While everyone wants immediate benefits from an omnichannel strategy, some franchisors and franchisees are focusing too much on their own internal needs and forgetting, ultimately, success will only come by focusing first and foremost on the customer experience.

Consultative processes too slow or too clumsy. While franchisors understand they need to consult with their franchisees, many do not know how to do this effectively. Good consultation involves gathering people’s frank views using a safe and constructive process. Then making good decisions based on objective and transparent criteria. It can be fast and effective when done right. More education is needed here.

Technology committees having the wrong people on them. Some networks are using their Franchise Advisory Council (FAC) as a technology advisory group. The best technology advisory groups contain specialists chosen for their expertise. These will often be younger people who may not fit the typical FAC member profile.

Confusion over legal and territory obligations. Franchisors need to ensure they are not inadvertently in breach of the Franchising Code of Conduct, ACCC pricing laws or their own franchise agreements. While the Franchising Code states franchise agreements must now contain the franchisor’s policy on online sales and how these will be managed, some networks are still unclear on this.

Revenue and cost sharing arrangements not seen as fair. This can create resentment in franchisees and undermine the success of an otherwise sound omnichannel strategy. Extensive modelling with some trial and error may be needed to come up with a cost and revenue sharing model that balances risk and reward, and is seen to work for everyone.

Customers having an inconsistent experience with order fulfilment. While franchisors may expect online orders to be fulfilled by franchisees in an accurate, consistent and timely manner, franchisees may have other priorities regarding how quickly they attend to these orders. This also applies to franchisees in serviced based industries getting back to customers. A lack of alignment on policies and processes will obviously create brand damage.

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