Franchise Software Explained: Why One Size Doesn’t Fit All

October 19, 2016 | By

Franchise software is never going to find its way to the top of the App Store. But while it might not contend for design awards, this technology can be the lifeblood of a growing franchise. We’re going to unpack the elements franchisors should consider when addressing their technology needs. When it comes to developing software for the franchise market, one size certainly does not fit all. This is true for two primary reasons. First, many different industries are utilizing the franchise model. Second, the day to day needs of franchisors are often quite different from their franchisees. In this post, we will dive into both in detail, and then talk about the options available for addressing them.

 

Franchising Crosses Industries

Supercuts. ServPro. Subway. Although these  businesses are all franchises, hair salons, disaster recovery services and fast food restaurants, they couldn’t be more different. Their day to day operations don’t overlap and they don’t service the same customer needs. When it comes to subscribing to, purchasing or developing software, these companies are generally looking for different solutions. Supercuts likely needs to focus on client bookings and stylist schedules. ServPro would prioritize getting properly equipped technicians on site as quickly as possible. Subway may be emphasizing management of its supply chain. No one would be satisfied if someone tried to build a single software product to serve these 3 companies.

 

Franchisors Versus Franchisees

Even if every franchise provided the same services, their software would still need to address two very different user types. This is because the franchisor serves the franchisee while the franchisee serves the client. We’ve already talked about examples of the features different companies might need to make their customers happy. When it comes to franchisors, however, they require a unique collection of functionality. The first batch of features relates to operations. This includes the on-boarding of new franchisees and the oversight of the details related to those locations. This functionality could also include call center, marketing or other shared services. The second batch of features relates to financial management. If a franchisor can’t efficiently calculate, verify and collect royalties, it will struggle to succeed. And if that franchisor can’t quickly assess relative profitability and performance, it will be even harder to grow.

 

Franchise Software Comes in Three Categories

If the technical needs for franchising are so unique, what are a franchisor’s options? While there are many, I would group franchise software into 3 broad categories:

1: Off the Shelf Software (“OTS”)

OTS development allows the same product to be sold to a large number of customers. Its name comes from the ability to purchase it off the store shelf like a can of soup. Today’s OTS is typically purchased digitally (Microsoft Word now comes from a download instead of a box), but the concept remains the same. This software is installed on individual computers and runs as a standalone application.

Pros: There isn’t too much excitement here. Aside from generally not requiring an internet connection, OTS has few clear advantages.

Cons: OTS requires installation on individual computers. This introduces a need to manage and update the software yourself. When it comes to customization, you should expect little to none.

 

2: Software as a Service (SaaS)

SaaS allows customers to avoid the need to install a piece of software. Instead users subscribe on the internet and are provided access to the application via the browser on their computer, tablet or phone. Generally there is nothing to download (except in the case of a mobile app), and SaaS functionality is often tiered. Additional features become available as the subscription cost increases.

Pros: SaaS removes the need to manage software installations and versions across many users. Additionally, it typically puts functionality in a user’s hands more quickly than any other option.

Cons: Although some SaaS products allow for online or offline use, SaaS typically needs an internet connection to run. When it comes to customization, SaaS typically offers various subscription levels. However, if the functionality you need doesn’t exist in any tier or is packaged with costly features you don’t want, you’re out of luck.

 

3: Custom Software Development

Finally there is custom development. This category is comprised of franchise software that is partially or completely created for a single customer. While it can be developed as an installable program or a cloud application, today’s custom software is typically built for the web.

Pros: When it comes to implementing the right mix of functionality to suit your needs, custom software is ideal. It can play nicely with your existing tools and data, and if developed correctly, can scale to meet the changing needs of your business like nothing else.

Cons: This level of customization comes with a cost. It takes time and money to develop or upgrade a product. Custom software is generally the most expensive option of the three.

 

What’s Right for my Franchise?

I wish this question had a simple answer. Unfortunately, for the same reasons that franchise software is so unique, it’s impossible to make a universal recommendation. Some franchises could find a collection of SaaS products that suit everyone’s daily needs. Others may find that since no pre-packaged solution is a perfect enough fit, a custom tool is the only way to go. When it comes to making this decision, what matters most is that a franchisor truly understands what makes her needs unique. She needs to start by being thoughtful about the functionality needed to serve her specific market and customers. Then she should assess the management tools needed to handle growth and operations across various locations. Finally she should review how much those managerial requirements overlap with the needs of her franchisees. Only then can she make an informed decision about how best to address her franchise software needs.