People Innovation Excellence

Digital Franchising (part 2 of 2)

By Deva P. Setiawan S.T., M.M.

Many industries could benefit from adopting the digital franchise approach. It is an ideal model for:
• Low-tech verticals, where local businesses are trying to connect with local consumers. Industries like restaurants, mechanics, dry-cleaners and spas don’t have the time or the know-how to focus on connecting with their consumers online or maintaining an online presence with updated content.
• Secondary and tertiary markets that lack a digital connection to their local consumers. The markets are not usually a primary focus for large, national competitors who use a traditional business model and hire remote sales teams in remote offices.
• On-the-ground entrepreneurs who understand their local market, where local content management and oversight is crucial to user acquisition and retention. Too often searches yield inaccurate or incomplete results. A local franchisee has a vested interest in the accuracy and completeness of the web and mobile content in order to bring relevant and up-to-date information to the end users.

What are the benefits to the digital franchisee? Digital franchising offers prospective business owners a wealth of opportunity to quickly and easily grow a profitable business:
• Lower start-up costs and lower overhead: the franchisee usually pays an initial start-up and annual royalty fees that are far less than the cost to start a traditional, brick-and-mortar operation.
• Minimal team management and hiring: the franchisor provides full-time web and design engineers, customer service and support staff, while the franchisee focuses on local sales and marketing.
• Ownership of an Internet-based company, with low-tech knowledge: the potential franchisee only needs to have a minimal understanding of technology development, hosting, digital marketing, and design.

After nearly a century of traditional franchising, vertical industries are positioned for change by adopting the digital franchise model. Combining technology and locally-vested execution can allow franchisees and franchisors to scale at an incredible pace. It will be exciting to see what concepts and brands lead the way in digital franchising in the coming years.

Digital franchising has characteristics: no inventories, no traditional store front, no employees, not MLM, all internet based.
Intelligent Netware promotes the digital franchising and talks about scaling a business as “scaling is a series of balances, between speed and thoughtfulness, size and simplicity, repetition and reinvention. The overarching balance, it seems to me, is between optimism and pragmatism. Optimism inspires the belief you will reach the next level. Pragmatism warns what will happen if you don’t prepare for it.”

Chris Jeffrey gives an advice to digital franchisors, “Make sure you really spend the time and money on technology and integrated applications that bring together your email marketing, your CRM tool, your social media and so on. All those components need to be integrated with your core product–don’t just focus on building it, but also the applications around it that will support it from an operational perspective. You’ll be successful depending on how scalable you are. Not being able to scale will kill you.”
(References are on writer)

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