Lack of capital, manpower resource constraints, the time required to open another store, the involvement of business risks etc often redirects businesses to opt for the franchise option for growth and expansion. Franchise model has proved to be a successful and profitable business model for several business enterprises and companies of national and international repute. The right franchise model can offer a win-win situation for both the franchiser and the franchise. However, rolling out and operating the franchise platform need meticulous business planning and execution. The most sensitive stake involved in a franchise business is the brand name of the franchiser business. Therefore, it becomes imperative for the franchiser businesses to ensure that their franchisees carry out the concerned business operations in line with the accepted standards laid down by the former. This is where developing Standard Operating Procedures (SOPs) can play a pivotal role in any franchise business model at work. In this article, we’ll try to focus on the importance of SOPs in a franchise business expansion.
Familiarity with Services
The franchise model is very common in the retail industry where customer experience assumes a significant priority. Customer experience can include a wide range of elements including how the business/store appears, how the merchandising is done, the physical environment provided to the customers, how employees deal with the customers, how the services are rolled out, how payment is processed and so on. A business enterprise can exercise absolute control over these elements when they are in charge and ensure that their customers get the best experience. When the same business enterprise becomes a franchiser, it becomes very important for them to ensure that their customers experience familiarity with the way services are being rolled out by the franchisees. With SOP manuals, franchisers can provide a systematic and detailed road-map to their franchisees in executing their day-to-day operations of various processes. These SOPs will help the franchisees conduct business operations with utmost precision and as a result, franchisers can have better control over the operational procedures and standards followed by their franchisees towards securing customer satisfaction and delight.
With SOP manuals, franchisers can provide a systematic and detailed road-map to their franchisees in executing their day-to-day operations of various processes
Maintaining Operational Standards
Another relevant aspect of franchise business model is maintaining the operational standards in all the areas of operations. Franchisers have to clearly establish and communicate the expected operational standards and performance output pertaining to inventory management, merchandising display and demonstration, discipline and code of conduct, payment processing, communication protocols, grievance redressal, reporting mechanism etc. Merely providing guidelines may not be sufficient as deviations in the way a process is executed will result in differences in process output and performances which will eventually affect the customer experience. Therefore, it becomes necessary for franchisers to develop standard operating procedures which can be used by their franchisees to ensure that operational activities are being carried out as mapped and desired process outputs are achieved consistently. For example, a franchiser may issue a guideline to the franchise that stocks have to be replenished on time. That’ll be a vague instruction because it states nothing on when to place a reorder, how much to reorder etc. But if the inventory SOPs clearly states that a reorder has to be placed when the stock reaches a certain specific level, the franchise will be in a much better position to take a timely action towards stock replenishment. Thus, at the operational level, SOPs can provide a clear-cut roadmap for the employees to execute their responsibilities in a systematic and step-by-step manner.
Merely providing guidelines may not be sufficient as deviations in the way a process is executed will result in differences in process output and performances which will eventually affect the customer experience
Staff Recruitment and Performance
Employees play a crucial role in any business enterprise whether it is a franchiser or a franchise. However, in case of a franchise business, it becomes even more important for the franchiser to ensure that the right employees are hired; are trained in the right way and their performances are monitored and controlled in the right way by the franchisee business. One of the best ways of making sure that franchisee staff management takes place in line with the standards laid down by the franchiser is by having HR SOP procedures or simply HR SOPs. With these accepted HR SOPs both the franchiser and the franchisee can monitor the HR activities and ensure that these activities are taking place in accordance with the predetermined standards. For example, with the job specifications provided by the franchiser, the HR department of the franchise can incorporate the same in its recruitment and selection process which will help them hire the right employees for the right jobs and nothing is left to chances or compromises in the quality of the manpower being hired.
One of the best ways of making sure that franchisee staff management takes place in line with the standards laid down by the franchiser is by having HR SOP procedures or simply HR SOPs
Reporting Mechanism
Needless to say that it is very important in a franchise business to have a strict reporting mechanism in place. It is through this reporting mechanism that a franchiser can keep a tab on the performance of the franchise on a daily/periodical basis. Franchise performance can be monitored from various informational inputs like daily/weekly sales, inventory turnover, customer footfall, customer feedback and grievances, regulatory compliance, employee strength and their performance reports, the status of assets (machinery, equipment, furniture etc) and so on. This necessitates the presence of a suitable reporting mechanism through which a franchiser can access/receive the aforesaid informational inputs from its franchisees. With the help of SOPs, the requirements of a reporting mechanism can be linked to the routine operational procedures of the franchise. For example, a franchisee store manager can be assigned the responsibility of sending/communicating the daily sales report to the franchiser’s office as a part of his/her daily work schedule before calling it a day.
It is through this reporting mechanism that a franchiser can keep a tab on the performance of the franchisee on a daily/periodical basis
Ensuring that customers continue to have a delightful experience through a franchise business involves building up of the right franchise platform running on the right business processes in the background. To exercise better control over these business processes, SOPs can play a vital role for the franchisors. By laying down the operational procedures for various business processes like inventory, HR, marketing and retail etc both the franchisor and the franchise can have better control over their business operations and maintain the predetermined standards of performance and output.
Benefits of Standard Operating Procedures (SOPs)
To read more article related to this topics click here: Why Business Model is the First Step Towards Organizing Your Business? | YRC, How Can an SME Raise Funds from Public? | YRC, 05 Reasons why Developing the Right Culture in the Organization is Inevitable for Growth | YRC, How SOPs will Benefit Wholesale Brand Venturing into Retail | YRC.
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Author Bio
Nikhil Agarwal
Chief Operations Officer
