Franchise research reveals some types of franchisee field support services enhance the franchise relationship and operations whereas others may impair them.
Research comparing support services in the mature franchise sector of America compared to the younger franchise sector of Germany aims to provide some insights into which franchisee support services are more effective.
While the research found support services in America tended to be fairly consistent across the sector, fewer support services were generally offered by German franchises, with much greater variation between franchises with the services offered.
The American-based researchers, Marko Grünhagen from Eastern Illinois University, Robin DiPietro from the University of South Carolina and Robert Stassen from the University of Arkansas, surveyed nearly 100 American franchisors and 100 German franchisors for the research.
The research provides franchisors the opportunity to assess the effectiveness of their franchisee support services.
“Franchisors need to carefully assess the assortment of support services offered to ensure they focus on the services which are most effective in their franchise, as well as services expected by new franchisees,” Marko said.
“With the difference in support services offered across German franchises, franchisors have the opportunity to create competitive advantage in franchisee recruiting and retention.
“With American franchisors offering largely similar support services this becomes more challenging. Franchisors believe the more services they provide the better they will address franchisee demands and pre-empt complaints so the more successful their franchises will be.”
Franchisee support services
The research revealed franchisee support services which were generally more effective, in that they were associated with less disruption in the franchise, were:
- staff training;
- software ordering;
- telephone assistance;
- point-of-sale; and
- franchise councils.
Alternatively, the provision of services such as field visits and newsletters actually appeared in the research to lead to more, rather than less disruption.
Newsletters were really common in larger American franchises, however had no association with franchise size in Germany and were more likely to be found in systems experiencing disruption.
Another difference between the two countries was the use of internet-based services.
Internet services were associated more with larger systems in Germany, whereas in America they were independent of system size, and more likely found in systems experiencing disruption.
An explanation for both of these services to be associated with greater (rather than lesser) levels of disruption may lie in the perception they may create with franchisees.
“Field visits may be perceived more as monitoring rather than as supportive, and newsletters may provide benchmarks that may be demotivating rather than seen as encouraging, although the franchisor’s intent may be to create greater transparency to motivate franchisees,” Marko said.
“Although larger franchises provide a franchise council, newsletters, market analysis and other areas of support there is not a single comparison between systems where one of the services is shown to be associated with a reduction in system disruption.
“Disruption depended more on the maturity of the market rather than differentiation of services, however identifying effective services may aid franchisors in their efforts to provide true ‘value adds’ to their franchisees while offering cost savings to their bottom lines.”
The researchers acknowledge the importance to next investigate franchisees’ perceptions of services (to compliment the survey of franchisors) as franchisees may not always understand the franchisor’s intention in offering certain services, viewing them as intrusive rather than supportive.
Professor Lorelle Frazer also contributed to the research.