SHARING THE BUZZ
in this article:
How do franchises tap into all the accumulated wisdom of their franchisees? How do franchisees get quick and practical advice?
Simon Lord has been exploring franchise intranets
We would like to thank both Cookie Time and AlphaGraphics for their assistance, and particularly the Cookie Time franchisees for allowing us to share their intranet correspondence.
The franchisee had a problem. The new product was being greeted with enthusiasm, but she just couldn't get the point of sale display to work right – it kept collapsing. Was it her or was it the device? She turned to her computer.
She went to the franchise's intranet site, gave her password, and entered one of the special discussion groups. There, she posted her problem and asked for advice. The next day, she had several responses. Yes, wrote another franchisee, there was a problem with the device, but here was one way of fixing it. Another suggestion came from someone else. Best of all, there was a message from the franchisor acknowledging the problem, suggesting another solution, and promising immediate action to resolve it.
It was a small problem, but it illustrated a big point. The whole issue had been raised, publicised and resolved within a day or so. Other franchisees had received the message too, and had had the chance to contribute. And rather than the promotion suffering from inconsistent point of sale, everyone was on the same wavelength and committed to making the new product fly. How long would that have taken by phone, fax or newsletter?
'The experts often talk about the importance of communication in franchising,' says Michael Mayell. 'Well, an intranet is the greatest communication tool a franchise can possess. We launched ours in January, and examples like the ones above show it's paying off already.'
Michael is director of Mayell Foods, the Christchurch company behind the Cookie Time brand whose products are found in dairies, supermarkets, schools, service stations, vending machines 'and wherever hungry people gather,' says Michael.
It's a competitive industry and, with franchised distributors constantly on the road throughout New Zealand, good communications are vital. 'Our intranet lets us advise and inform, gather customer feedback and competitor information, and respond quickly to opportunities and threats,' says Michael.
But what exactly is an intranet?
An intranet is a computer network managed by an organisation which allows only authorised people to access it. It is different from the Internet, which is a global public network connecting millions of computers worldwide. The purpose of an intranet is to share information rapidly over a secure system – the sort of information which might otherwise be carried by post, fax or phone.
Intranets have some obvious advantages for franchise systems, and yet they are still uncommon among NZ franchises. We have looked at two very different companies – local operators Cookie Time, and global print and publishing franchise AlphaGraphics - to offer a taste of the benefits an intranet can provide.
With only 35 franchised distributors, Cookie Time is not a large organisation yet it is a surprisingly powerful one. The company is the clear leader in a growing market and, thanks to a combination of good product development, aggressive marketing and clear focus, has more than doubled its sales in the past three years.
Cookie Time products are baked in Christchurch, then distributed through a network of franchisees, each of whom has their own van in the distinctive Cookie Time livery. Apart from distributing product these franchisees are also responsible for sales and promotion, merchandising, securing new outlets and managing stock rotation.
'They are the people who most truly know how the business is going on a day-by-day basis,' says Michael Mayell. 'We saw an intranet as being a way of tapping into that knowledge and sharing it for the benefit of everyone in the group. It also brings everyone closer together. While there might be three or four distributors in the big cities, the people servicing the towns are out on their own rather more. With an intranet, they can share more of the benefits of being part of the team.'
Mayell Foods started exploring the benefits of using email for internal communications among its office staff back in 1992, being one of the first companies in New Zealand to do so. By l997, the 'email culture' was so developed that Michael and his brother and fellow director Guy were able to move out of the office altogether and work from home.
'Although we have only just extended the intranet to the franchisees, we have managed the business through an intranet for some time. Staff have access to all the information flowing through the system that is relevant to their jobs. Using the intranet, issues are raised, options explored and decisions are made. It's like holding meetings without needing to have everyone present in the same place at the same time – which is far more efficient.
'In addition, all aspects of each staff member's day-to-day operations and long-term goals are apparent to other staff with inter-related roles. All developments, decisions and actions are documented and easily accessible for reference.
'We found the system vastly improved the communication, efficiency, simplicity and clarity with which we operate. It enabled us to implement significant strategies with a turnaround time from conception to implementation that is almost unheard of in other organisations. By extending it to the franchisees, we believed that we would increase those benefits many times over.'
The question was: how do you sell such an idea to 35 franchisees who may never have contemplated buying a computer? The plan was simple in concept and breath-taking in its execution. Cookie Time purchased 35 of the latest iMacs from Apple and presented one to each franchisee at their Queenstown Conference in January 1999.
The franchisees had no idea what was coming until they walked into the conference room and were greeted by the sight of 35 iMacs glowing with the brand's Cookie Muncher character. There was collective surprise – doubled when they were told they would be taking the new computers home at the end of the weekend. The computers were not free, but franchisees could earn 'iMac points' over the next three months by securing new outlets, extra signage, meeting quotas and so on. Earn enough points and the computers were free.
Each computer came pre-loaded with the necessary software, and much of the conference was given over to hands-on learning how to use it. In addition, distributors took home a custom-written manual on how to use the computers and the intranet.
The Cookie Time intranet was developed using FirstClass email software, one of a number of packages available. 80% of the development work was carried out by Cookie Time management staff, with assistance coming from the Macintosh dealers (Cookie Time uses Macs, but the same process is equally applicable to the more common PC's).
'I think it's very important that people in the company are intimately involved, so that company culture can be fused into the system,' says Michael. 'You need to keep it simple but make it genuinely useful for everyone involved.' Five staff spent about 10 hours per week on the system for four weeks, and the input of the external contractors cost about $2,000. 'From start to implementation took six weeks,' says Michael, 'including a two week break for Christmas.'
The AlphaGraphics Incorporated approach to creating an intranet was somewhat different from Cookie Time's, although the results are similar. As the leading global provider of print-related and digital publishing services, the company supplies primarily corporate customers from a network of 350 stores throughout 25 countries (the master franchise for New Zealand is currently available). Time differences between countries mean they need the 24 hour back-up which an intranet can facilitate.
With 90 headquarters staff, national master and local centre franchisees all around the world, AlphaGraphics' needs were therefore rather more complex than those of Cookie Time. In addition, AlphaGraphics centres deal with high-tech equipment and customers' digital files, meaning security and reliability are all-important.
Prior to the advent of the internet, AlphaGraphics already had an electronic communication system but it was 'nowhere near as user-friendly', according to John Kellen, AlphaGraphics' Director of International Development. The current intranet was launched in 1998 as part of a four year strategic plan for the internet. It took over a year to develop and cost around US$100,000.
Franchisees were already computer-equipped, and when the new AlphaLink intranet was launched at the annual Franchisee & Master Franchisee Conference, it was very well received.
One month after the Cookie Time franchisees took their shiny new computers home, the company allowed Franchise New Zealand access to its intranet to see what use was being made of the system. To say we were impressed is an understatement.
The Cookie Time intranet enables franchisees to send email direct to franchisor staff and each other, and to access six intranet 'conferences'. In these conferences, franchisees can send messages on specific topics for all distributors and staff to read. They can ask questions, read what others have sent, and offer responses. The conference topics are:
Distributors' News: general news that can benefit all distributors
Distributor Goss: general gossip
Competition: information relating to competing products or brands
Products: information and feedback on product quality, packaging, ingredients, etc.
Marketing: communication relating to past, present and future promotional activity
Systems Stuff: information on Cookie Time systems, procedures, manuals and so on
The intranet is currently generating around 300 emails a week from franchisees who have clearly taken to the eye-catching iMacs and the simple operating system. However, it is the quality of information, rather than the quantity, that is so impressive.
- A franchisee has a new owner taking over a local supermarket. They have other supermarkets in another area. What is their attitude to Cookie Time products?
- Does anyone have a second-hand pager to replace one that is too expensive to repair?
- A draft strategy for overdue debtor management is circulated, including the wording of the various letters. Any comments?
- Has anybody found it worth adding a certain product to vending machines at the expense of additional stocks of a best-seller?
- A competitor is selling into a key market at a very low cost. Is this a national policy, or a local trial? How should it be combated?
- A new POS display is giving problems. An instant solution is found, and a photograph of how to use it circulated to all.
None of these topics is particularly new or earth-shattering. What is impressive is the speed with which it is circulated around the entire system, and the way in which the knowledge and experience of each individual franchisee is harnessed and shared for the good of the group as a whole (see Leith Oliver's article on page 65). It is clearly living up to Guy Mayell's intention, expressed at the Queenstown conference, that the intranet should be 'like having a conference 365 days a year.'
The AlphaGraphics intranet, though more sophisticated, operates in a broadly similar way to the Cookie Time version. The site is divided into several areas including support, training, marketing, technical information and departmental issues, and also includes more than 20 special areas for Frequently Asked Questions (FAQ's) and two-way feedback. A separate confidential area is set aside for the use of the Network Leadership Council, AlphaGraphics' franchise advisory council.
AlphaGraphics has also put all of its procedures manuals on line as well as marketing information and artwork, which offers obvious benefits in regard to ensuring franchisees worldwide are all using the latest systems and images.
'As a result of having the intranet, we have been able to move quickly on a number of initiatives,' says John Kellen. 'We now have rapid and very cost-effective roll-out of new training and support programmes.'
Cookie Time is also looking at putting its manuals on-line in phase two of their intranet launch later this year. This will also allow for the management of many accounting and administration functions such as order placing and invoicing, 'reducing the paperwork side of the business still further,' says Michael Mayell.
Installing an intranet can have a powerful effect upon the corporate culture of a franchise operation.
'In order to exploit the power of the intranet to the full, the company has to be transparent to its franchisees and invite their participation in the company's strategy-forming,' says Guy Mayell. 'It's not about decision-making by committees: it's about letting people know what you're planning to do and getting their feedback. We have to be prepared to be challenged, to grow, to shift and change, rather than maintain fixed positions. That's what will keep us ahead.'
This policy has already been tested with the departure of a franchisee to a competitor. The information was posted in full on the intranet, along with a letter from the franchisee concerned. 'It was good to see it all out in the open,' says Karen Kelly. 'There were no rumours – all 35 of us got the full story.'
John Kellen of AlphaGraphics agrees that this is another advantage. 'We have always shared enormous amounts of information with our franchisee committee,' he says. 'Now the intranet has increased the amount of communication with and between all our franchisees. Everything we have and do is now on line 24 hours a day, seven days a week. Since all the information flows freely, all members of the network have become more available and more transparent to each other.'
Such transparency requires the franchise to be confident in the security of its intranet. Both intranets are only accessible by passwords, and in the case of AlphaGraphics their security software is updated monthly.
Communication is the life-blood of franchise systems, but paradoxically it can get in the way of doing business. The franchisor needs to give and receive as much information as possible in order to make sure that they are promoting the right things, developing the right products, providing the right support. The result can be a sea of letters, faxes and phone calls, product inventories and surveys.
An intranet can reduce all that and make communication briefer, quicker and much more of a two-way process. It is also much more effective. The questions raised are answered in a one or two liner by someone at the other end of the country who you might never have thought to phone. The feedback on the progress of a promotion takes place while it is happening, rather than through a feedback form when it's all over. It allows a process of 'Management by the Moment'.
Ian Milburn, a Cookie Time franchise distributor in Wellington, says, 'Before we got the intranet, promotions were evaluated when they'd finished. You didn't know how the others were doing, and by the time you actually found out so much water had passed under the bridge it didn't matter any more.'
Not only is the information immediate, but it also provides a written history of how any particular issue has developed and been handled. 'That's very valuable when it comes to reviewing and planning future activities,' says Michael. 'And you can imagine the benefits for a new franchisee – by looking back through the forums, they can get up to speed very quickly not just with how we do things, but why.'
Finally, everyone we spoke to identified one other, less tangible benefit – that of a sense of belonging.
'There's more sense in AlphaGraphics now of being a global network,' says John Kellen. 'Our US franchisees have more knowledge of the international part of the business, and that's very valuable.'
But even within New Zealand, the intranet can bring franchisees closer together. 'Before we had the intranet, there were times when we felt we were chugging away on our own,' says Ian Milburn. 'There might be certain things happening in our area that we thought were unique – but they weren't. Now we really get to find out what's happening in the market place.'
Karen Kelly of Cookie Time in Christchurch agrees. 'It used to be just me here, and then there was everyone else. John Fitch up in Auckland was nothing to do with me – but now we're all really part of a team every day. I'm computer-illiterate, but I haven't had any problems at all – it's wonderful.'
And Michael Mayell expects the company's investment in the intranet to pay off in no time. 'Our franchisees are conferencing every single day, sharing more information than ever before. When they next get together, they're all going to be old friends with a real appreciation of each other's areas. The benefits to Cookie Time are almost incalculable.'
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