People Innovation Excellence

Online Marketing Channel in Selling Franchise Business in Indonesia (Part 1)

Oleh Hendry Hartono, S.E., M.M. dan Erwin Halim, SPt., M.M.

Abstract: In Indonesia, as well as in the United States, franchise system is used as business expansion strategy for Small Medium Enterprises. In the year 2012, there are 1.700 franchise-format companies. (Indonesia Franchise Association, 2013). It means that the franchise-format business has significant impact to Indonesia economic. Recently, franchisors are looking the appropriate marketing channels in order to increase their number of outlets.

This paper databased on a survey in Jakarta on a 3-days December 2013 Franchise and Business Opportunities Expo with 82 respondents of franchise exhibition visitors (prospective franchisees) and 27 franchise exhibitors (franchisors). Half of this exhibition was followed by some franchisors and the others exhibitors sold products non-business opportunity. By using t-test and qualitative comparison, will be compared the answer from franchisors and franchisees.

The objective of this paper is to see the ways of online marketing channel offer by franchisors are absorbed or not by prospective franchisees or investors.

. Keywords: franchise; online marketing; Indonesia; marketing channel.

  1. INTRODUCTION

Franchise business gives more impact to the economic growth in the United States compare to non-franchise business based on the International Franchise Association report (2013). Furthermore, the report shown in the year 2008 up to 2009 when the United States experienced the economic crisis, franchise business absorbed more employability compare to non-franchise business. As follow the positive impacts, franchise is used as one of strategy on business development.

In Indonesia, as well as in the US, franchise system is used as business expansion strategy for Small Medium Enterprises (SMEs). In the year 2012, there are 1.700 franchise-format companies. (AFI, 2013). It means that the franchise-format business has significant impact to Indonesia economic. Recently, franchisors are looking the appropriate marketing channels in order to increase their number of outlets.

The objective of this paper is to see the ways of online marketing channel offer by franchisors are absorbed or not by prospective franchisees or investors.

2. LITERATURE REVIEW

Franchise Sectors Categories and Majority

The franchise sector categories are differently named di all the world. For instance, in the US the franchise sector categories divided into: Automotive, Business Services, Commercial and Residential Services, Lodging, Personal Services, Quick Service Restaurants, Table/Full Service Restaurants, Real Estate, Retail Food and Retail Products and Services. (IFA, 2014). On the other hand, Yodle (2013) categorized franchise sector as: Automotive, Business Services, Cleaning & Maintenance, Education, Home Services, Medical, Retail and Other. There are no F&B as one sector. Besides that, Franchise Update (2013) also in the US categories as follow: Automotive Baked Goods, Ice Cream or Yogurt, Business Related, Child Related, Cleaning & Maintenance,   Education Related, Fast Food Restaurants, Health & Fitness, Home Services, Restaurants (Dine in), Retail Food, Retail Stores and Senior Care. It shows that the franchise sectors categories have different system in taxonomy in the same countries and obviously in different countries.

In Indonesia, 69.51% prospective franchisees are looking for Food and Beverage or Culinary sector (including: dine in restaurants, fast food restaurant, retail food & beverages (booth), ice cream and yogurt, and bakery). Same with Indonesia, in Malaysia, Food and Beverage sector as majority commands for more than 30 percent of the market share and remains the franchise best prospect for Malaysia. Unique food and beverage franchise concepts would still be in demand. (Yeoh, 2009).untitled

Information System and Marketing

Boulay (2010) acknowledge that Information System have a disciplining effect that can be a powerful tool in managing the franchisor-franchisee relationship as long as they are implemented and managed by franchise headquarters. Further, Paswan et al (2009) found that franchise system information is to share information and new knowledge between franchisor to franchisee and conversely and using this knowledge for strategic advantage for both parties.

Pamecha (2008) found that technology solutions can help significantly in reducing operating costs while increasing franchisee top lines and improving profitability for most franchise systems. Hundreds of franchise organizations have already benefited from implementing solutions that have helped eliminate manual processes and streamline operations. Some of benefits of technology solution in franchise system are: (a) automation of royalty-reporting collection processes, (b) implementing business intelligence/ performance dashboards, (c) creating an online platform for communication and collaboration, (d) building a legal database, (e) CRM and marketing applications, and (f) eliminating multiple technology platforms across departments.

Furthermore, Pamecha (2008) considers that technology can also help in eliminating manual processes related to the sales process such as entering manually all incoming leads into a database, sending out paper packets and applications forms instead of online electronic forms, sending out franchise disclosure document packages and more.

Pamecha (2008) found that technology solutions can help significantly in reducing operating costs while increasing franchisee top lines and improving profitability for most franchise systems. Hundreds of franchise organizations have already benefited from implementing solutions that have helped eliminate manual processes and streamline operations. Some of benefits of technology solution in franchise system are: (1) Automation of royalty-reporting collection processes, (2) Implementing business intelligence/ performance dashboards to provide feedback on sales flow of services or products, (3) Creating an online platform for communication and collaboration, (4) Building a legal database that can track legal and compliance information and the entire communication history with franchisees, (5) CRM and marketing applications can and (6) Eliminating multiple technology platforms across departments can reduce the costs involved with maintenance, technical support, programming changes and user training associated with different applications while providing data integration across the entire organization.

Pamecha (2008) conclude that internet continues to be the major direct source of franchise leads for most organizations. Search engine optimization (SEO) techniques leverage and a Google or Yahoo! Keyword strategy management effectively can be a powerful source of critical leads that are actively looking for an investment or owner-operated franchise opportunity. Furthermore, Pamecha (2008) also considers that technology can also help in eliminating manual processes related to the sales process such as entering manually all incoming leads into a database, sending out paper packets and applications forms instead of online electronic forms, sending out franchise disclosure document packages and more. The using of online marketing is a must. He found that more than 90 percents customers are looking for franchisors websites.

Yodle’s (2013) survey shown that 87%  of respondent (30% very important, 28% important and 29 % quite important) agree that online  marketing for franchising are important. And also, there 89% of respondent (31% very important, 31% important and 27 % quite important) agree the importance of online marketing in choosing a franchise business. Can be concluded that online marketing is important both for franchise business and on determining/ choosing a franchise business.


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