Small businesses are benefiting more than ever from advances in low-cost technology, including mobile solutions, point-of-sale systems and timesaving apps. But franchising has been slow to adapt—disappointingly so, as it’s one of the business models that stands to gain the most from cloud computing and other digital solutions.
Tariq Farid is an exception. A die-hard tech geek, he started Wallingford, Conn.-based Edible Arrangements in 1999 with technology at its core. But he says he doesn’t find many kindred spirits in the franchise world.
“Saying that many franchise systems are stuck in the ’90s is being kind,” he says. “I think franchising is an amazing model, but technology is not in the comfort zone of a lot of franchise leaders. They don’t understand that the point of technology is to make life easy so franchisees can focus on growing their business, not running their business.”
Navid Safabakhsh agrees that some franchises have a difficult time turning the ship when it comes to new technology. The co-founder and CEO of San Francisco-based Empowerkit, a service that creates and manages websites for franchisors and franchisees, says that while many national brands have adopted his system, convincing the franchise community to try something new is challenging because of the often lengthy vetting process for vendors. Additionally, he says, decades-long contracts mean that some vendors may be delivering systems that are years out of date.
“Many franchise brands have paralysis when it comes to technology,” Safabakhsh says. “They think, If I don’t do anything, I’ll be safe.”
That don’t-rock-the-boat strategy is no longer acceptable. Innovations like fleet-management apps, improved customer-loyalty programs and even digital signboards are already transforming the franchise world. And the operational streamlining provided by cloud-based tools and new restaurant technologies, as well as efficiencies in training and back-end operations like customer retention and billing, are creating two classes of franchise systems: those that are getting a bump from tech adoption, and those that will soon feel the pain from waiting too long.
“The growth of cloud computing has transformed the franchise world,” says small-business technology expert Ramon Ray. “Existing franchises don’t have to be newer to keep up, but they have to stop being slower.”
Grease-pencil manufacturers were shaking in their boots last year when Pittsburgh-based NoWait released its consumer-facing app. Since 2010, the NoWait system has helped restaurants manage their waiting lists, replacing pagers—which, at $50 each, can be expensive when diners walk away with them. (This happens more often than you’d think.)