Often, frustrations can remain private. When vocalized, word can spread. Occasionally, we are made aware of some franchisees requesting for an end to company-owned stores. From an outside perspective, you can see the value of the opinion and you can understand their position. However, company stores are actually incredibly valuable for franchisees for a number of reasons.
Before heading into these reasons, perhaps we should explain why some franchisees feel a level of discontent. Essentially, franchisees feel as though company stores have better access to staff training, local advertising, and even preferential pricing. For franchisees, they suddenly feel as though they have another competitor in the market and this can be extremely damaging for their unit.
Despite this, there are actually some very important advantages to company-owned stores for franchisees and why they will continue to play a major role.
Flagship Stores – First and foremost, company stores can sometimes be ‘flagship’ stores and these normally attract a great deal of attention. When it comes to marketing, flagship stores create a buzz around the brand and this has a knock-on effect on all franchisees.With increased interest, franchisees should see an improvement in traffic and sales.
Testing Ground – Furthermore, company stores actually act as a testing ground for new products and new ideas. Since they’re actually owned by the company themselves, these locations allow ideas and products to be tested in real-life environments rather than forcing changes upon franchisees without extensive testing.
With company-owned stores, the brand can test all new ideas before rolling them out to all franchisees and this benefits everybody. Firstly, the franchisor quickly sees what does and doesn’t work in a real store. Secondly, the franchisee benefits from only the most successful products and methods. Without a place for experimentation, this can cause issues for a brand and it puts franchisees into some difficult positions.
In addition to products, it might also be new technology and this is especially relevant these days. As the company stores test new technology, the brand can get a response from employees and even customers if the technology is customer-facing. If it doesn’t work so well, only the company store suffers. If it works well enough to roll out countrywide, every franchisee will benefit and the brand can point towards positive results as the reason for the change.
Finally, a company store can also be a testing ground for new prices. Often, franchisees are sensitive about pricing and they dislike being told to adjust prices with no evidence of it being better or worse. Why? Ultimately, it eats into the profits of the franchisee. With proof a change in prices can lead to increased profitability, the franchisee will be more willing to ‘play ball’.
Mini Warehouses – Additionally, we’ve also seen many brands treat company stores as mini warehouses which allows franchisees faster access to stock. Without having to wait so long for deliveries, the whole stock management system can improve and can potential reduce the amount of stock a franchisee requires on site.
Reduced Cost – Finally, another company store adds to the network regardless of who owns it. For the consumer, ownership doesn’t matter as long as there are more stores and the brand can continue to grow.
As we can see, company stores actually provide a benefit for franchisees as well as franchisors and this is why they’ll continue to play an important role.