Franchising and Innovation: Can the Two Go Hand in Hand? | Be The Boss

Franchising and Innovation: Can the Two Go Hand in Hand?


Mar 11, 2013

Ask franchisors what they’re looking for in a good franchisee, and, more than just having previous experience or knowledge, franchisors are likely to stress an ability to follow a system. After all, it’s common knowledge that at the core of any franchise’s success is a tried, tested, and perfected system which is then duplicated over and over again. But what if a franchisee has an idea for a new product or a better system of efficiency? In such a well-oiled machine, is there room for innovation?

And when there is leeway, does that end up benefitting the whole system? Finally, can the role as franchisee be satisfying to individuals who like to innovate and have a bit more control? We decided to put the issue on the table and asked experts and franchisors, alike, to weigh in on this age-old debate.

“Some franchisees, and some franchise systems, are more effective when franchisees can innovate,” says John Hayes, a franchise consultant, former franchisee and franchisor, and author of several franchise-related books. “More often, however, when franchisees have to search for answers or experiment, the results are likely to be frustrating and quite often the franchisees lose money. Innovation belongs to the franchisor and it's the responsibility of the franchisor.”

However, that’s not to say that innovation on the franchisee level hasn’t happened successfully. In fact, it’s thanks to franchisees that the infamous McDonald’s Big Mac and Filet-O-Fish even exist. And its franchisee input that was the driving force behind Domino's Pizza’s new American Legends pizza line which launched this year as well as its new line of breadbowl pastas which was developed and tested by a Los Angeles franchisee. “We encourage ideas and innovation from the whole system – and we put many of our franchisees’ ideas into operational practice,” says Mike Mettler manager of Franchise Development at Domino’s Pizza.

At WSI, an internet consulting franchise, innovation is so highly valued that an international excellence and innovation conference is held annually to recognize franchisees who have provided internet marketing solutions in their local markets around the world. In addition, Ron McArthur, president of the franchise, personally meets with the top 30 revenue producing franchises eight times a year to discuss ideas. And 90 percent of the products and services within the WSI e-marketplace have come from franchisees. “New franchisees are trained on the basics of business but innovations are introduced on a quarterly basis to ensure that we are offering the latest and best internet marketing processes to end clients that deliver results,” says McArthur.

But in a franchise system, the right to suggest new ideas is most likely something to be earned. It comes with time and usually only after a demonstrated ability to follow the system at hand. “Most good systems don’t want new franchisees to even think about innovations until they learn the existing system inside out and prove that they can execute it like a star,” says Jeff Elgin, CEO of FranChoice Inc., a network of franchise referral consultants. “At that point, they have become successful, their base is secure, and they have earned the right to consider innovations.”

At Toppers Pizza, a 26-unit eclectic pizza delivery franchise brand, franchisees are very much involved in product development since they are the ones working with the customers on a daily basis, according to Scott Iversen, Director of Advertising & Franchise Development. However, that doesn’t eliminate the fact that a franchisor/franchisee relationship is a partnership with a certain amount of hierarchy. “At the end of the day, when a decision is made, [a franchisor] wants a franchisee who is going to ‘carry the banner’ for the brand and support the direction,” says Iversen. “People who are great compromisers make great franchisees. People who always have to do it ‘their way’ are generally not well-suited to be a franchisee.”

For existing franchisees who have a new idea that they’d like to implement, Elgin recommends first identifying the person at corporate who is responsible for receiving such feedback. Present the idea early on before spending any time or money developing the idea because, as Elgin says, “many of the ideas a franchisee comes up with will already have been proposed by another franchisee.”

There’s an old adage that says two heads are better than one. If that’s true, then it naturally follows that hundreds or thousands of people can make one system run better than just one. But be sure to first research what policy the franchisor has in place for accepting new ideas and then, only after you’ve demonstrated that you can follow the system at hand, introduce your idea. Because, when it comes to innovation, not everyone sees it in the same light.