Using Business Analytics in Franchise Organizations

Using Business Analytics in Franchise Organizations

Ye-Sho Chen (Louisiana State University, USA)
DOI: 10.4018/978-1-5225-7362-3.ch041
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Franchising has been a popular approach to growing a business. Its popularity continues to increase, as we witness an emergence of a new business model, Netchising, combining the internet for global demand-and-supply processes and the international franchising arrangement for local responsiveness. In this chapter, the authors show that building up a good “family” relationship between the franchisor and the franchisee is the real essence of franchising, and proven working knowledge is the foundation of the “family” relationship. Specifically, they discuss the process of how to make business analytics “meaningful” in franchising: business challenges, data foundation, analytics implementation, insights, execution and measurements, distributed knowledge, and innovation.
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Business Challenges: Managing The Franchisor And Franchisee Relationship

Franchising is “a business opportunity by which the owner … grants exclusive rights to an individual for the local distribution ... The individual or business granting the business rights is called the franchisor, and the individual or business granted the right to operate … is called the franchisee.” (Justis & Judd, 2002, pp. 1-3) Developing a good “family” relationship between the franchisor and the franchisee is the key business challenge of a successful franchise (Justis & Judd, 2002). Figure 1 describes how such a “family” relationship is built in the franchise business community. In the figure, it shows that the franchise system is operated in the dynamic business environment of global, national, regional, and local communities. The “family” relationship is developed through a mutual learning process of person-centric relationship building.

Figure 1.

Understanding how the franchisor/franchisee “family” relationship works


The franchisor’s learning process is incrementally developed through five stages (Justis & Judd, 2002): Beginner – learning how to do it; Novice – practicing doing it; Advanced – doing it; Master – teaching others to do it; and Professional – becoming the best that you can be. Once attaining the advanced stages of development, most preceding struggles have been overcome. However, further convoluted and challenging enquiries will arise as the franchise continues expansion. This is especially true once the system reaches the “Professional” stage, where various unpredicted and intricate problems could arise. To capture the learning process, a counter-clockwise round arrow surrounding the franchisor is used to depict the increasing intensity of learning as the franchisor continues to grow.

Key Terms in this Chapter

Data Mining: Analytical techniques used to find out the hidden relationships or patterns residing in the organizational data.

Franchisor/Franchisee Relationship Management: The vital factor for the success of a franchise, including: Knowledge, Attitude, Motivation, Individual Behavior, and Group Behavior.

Franchisee Life Cycle: The stages a franchisee goes through in the franchise system: Courting, “We”, “Me”, Rebel, Renewal.

Data Mart: A small database with data derived from a data warehouse.

Customer Service Life Cycle: Serving customers based on a process of four stages: Requirements, Acquisition, Ownership, and Retirement. Many companies are using the approach to harness the Internet to serve the customers.

Data Warehouse: A database which is subject-oriented, integrated, time-variant, and non-volatile.

Franchisor/Franchisee Learning Process: The stages of learning, including Beginner, Novice, Advanced, Master, and Professional.

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