October 31, 2014

Franchises Are Becoming More Transparent

franchise Internet researchOne lesson that all of us seem to be learning lately, is that nothing stays the same. Entire industries are changing. Here’s another news flash: the Internet has changed the franchise industry — big time.

The Internet has significantly impacted the franchise industry in several important, and what I consider, game changing ways:

  • Prospective franchise owners don’t have to wait for a 15-page franchise brochure to be delivered to their residential mailboxes via the USPS, Fed Ex, or UPS. Now, to find out what the franchisor is selling them, prospective franchise owners can learn about specific franchise opportunities in the blink of an eye, electronically. This change alone has made it necessary for franchise companies to upgrade their information technology, and design fast and efficient follow-up systems. I recently discussed how some small businesses are using tools like email autoresponders to help them stay on top of things.
  • Franchise sales personnel who are not Internet savvy, can stand out like a sore thumb. Case in point: I have worked with franchise sales reps who didn’t know how to insert a website link into an email that I requested be sent to a franchise candidate of mine. Scary.
  • Prospective franchise owners don’t have to go spend 10 hours at their local libraries to learn all about franchise law, franchise research techniques, and other important information. Now, even if you only have moderate Internet research skills, you can easily find websites and blogs that specialize in the franchise industry, and learn enough in a couple of hours to give you a nice start. (Spending several hours at your local library is however, good for your health. I highly recommend it.)

But there is something else with far greater implications on the franchise industry than the ability to have some instant gratification. It is transparency.

Before the advent of the internet, a prospective franchise owner would have to hire an attorney to do some fishing around, in order to learn about the history of a franchisor. With the internet, information like that can be found fairly easily.

There are a plethora of websites and blogs that share negative information about bad meals at fast food franchises, bad PR moves by individual franchisees, or class action lawsuits filed against franchise companies by franchisees — that may have not been disclosed to prospective franchise owners, early on in the sales process. (Because they didn’t have to be.)  As a matter of fact, fellow franchise blogger Sean Kelly, has a post on his blog that has over 300 comments from some rather disgruntled franchisees of an almost defunct franchise coffee chain.

However, just like you are not supposed to “believe everything you read” in newspapers, the same rule should probably apply to websites and blogs that seem to specialize in sharing negative information about companies, or their products and services.

These days, for a franchisor to really think that they can get away with hiding negative information about their product, service, or franchise offering, is to not be at one with what I call Internet reality.

Armed with a laptop, an Internet connection, and some average search engine skills, just about anyone can find the facts they need to make an intelligent decision. With more and more of us pinching pennies lately, this type of transparency can only help.

* * * * *

Joel Libava on 2008 franchise trends About the Author: Joel Libava is President and Life Changer of Franchise Selection Specialists. He blogs at The Franchise King Blog.

14 Comments ▼

Joel Libava - Franchise Expert


Joel Libava Joel Libava is the Franchise Expert for Small Business Trends. Joel, The Franchise King®, equips today’s prospective franchise owners with time-tested, proven techniques designed to increase odds of success. He does this through one-on-one coaching, and gobs of useful content that can be found on places like Small Business Trends, SBA.Gov, and his award-winning franchise blog, The Franchise King Blog . He’s been featured in Entrepreneur® magazine, and is frequently called upon by national media outlets and publications for his no-spin insights into the world of franchising.

14 Reactions

  1. Joel, you’re right. Searching for facts these days is not that expensive nor difficult. Thanks to the technology around us.

  2. Joel,

    Have you seen an increased interest in franchising lately? Where could I find positive stuff about different franchising opportunities? Do you think it will “pop up” hybrids of traditional companies and franchise chains?

  3. Thank you Arthur and Martin,
    Yes, there is more interest in franchising, and there are some positive stories of franchise chains growing, here and there.

    There are some franchise news websites that post stories about franchise systems and their growth. Franchise Wire is one of them.

    The Franchise King
    Joel Libava

  4. This is one of the best things about the internet. Companies really have to take a great interest in their reputation and customer service. They can’t hide much of anything these days and that only benefits us as consumers.

    Instant access to info is a must. Business reps who are not internet savvy will only hurt them in the long run.

  5. For franchisors the message is: you can run but you cannot hide.

  6. Everything is becoming more transparent in this day and age. Nothing can escape the transparency when we have powerhouses like Facebook and Twitter looming.

    And I believe this is a good thing for the vast majority of us out there. If you are a business owner who has been burned by a frustrated customer, then you may not think so. But for most of us, this allows us to get to the heart of the matter very quickly.

    The one caveat, as you mentioned, is making sure you take the negative feedback with a grain of salt. The negative comments will always FAR outweigh the positives in number and intensity.

  7. Hey Joel, I’m working on a blog piece about transparency and your title here grabbed me. As a culture, many of us used to live in small towns and you could not escape being known. Everyone knew what everyone else did. The web is global, but we’re certainly feeling like it is a small town again. Many of us fled those small towns, to the big cities, to gain some sense of privacy and yet we’re back to small town phenomena again, no matter where you live. In the web pocket communities, we are known and can be known with just a few clicks.

    What does this mean for business? I think there’s something going on that Chris Anderson pegged a while back, and some others — 1,000 True Fans is all you need to make a living, earn a livelihood. The Long Tail concept is now at work in terms of transparency. In the effort to be known by your niche community, you become widely available to anyone who wants to learn about you. And in that sense, we are living in small towns again where that Cheers sitcom pegged it — about everybody knows your name.

    Our reputations, our integrity, our word are everything. Now if we could just build mechanisms into larger industries that are troubled because of a lack of transparency, we’d be in good shape.

  8. I’d be interested to know if anyone is tracking the time-to-buy a franchise; that is, does the easier/faster access to franchise information result in faster decision making to buy or not to buy?

  9. Hi,
    Thank you for your comments. TJ, great job explaining things in a small town way. ONLY 1,000 people, huh?
    Good!

    As for the question about time and technology, I have not seen franchise investment decisions speeding up, because of technology.

    With this economy, I am seeing more caution, which tends to slow down the process. great question.

    The Franchise King
    Joel Libava

  10. Always welcome Joel! Two thumbs up! ;)

  11. No matter how old your posts are, they still seem so applicable. You provide great information.

  12. Thank you Arthur and Martin,
    I wonder if it is now a good time to get into a franchise. I am glad you follow this information, I just don’t think the numbers add up to transparency. But we are looking to franchise and your info is very helpful. Will be back soon.

    Yes, there is more interest in franchising, and there are some positive stories of franchise chains growing, here and there… this is true but the failure rate is sooo high.

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