Wake-up call: E-commerce is changing your franchise formula!

The introduction of an online shop within a franchise model has significant implications for the cooperation between the franchisor and franchisees. What might seem relatively simple for a chain of company-owned stores entails a substantial transformation process for a franchise retailer.

When introducing an online shop into your franchise organization, legal aspects play a crucial role, and this is frequently highlighted in the media. However, it's about much more than just the legal side. It is essential that both the franchisor and the franchisees understand that the introduction of an online shop impacts multiple areas of the franchise model.

Below is a brief overview of matters you, as a franchisor, need to arrange:

• Convince your franchisees that they are better off with a single overarching online shop, rather than each entrepreneur operating their own.
• Assess how e-commerce will affect your customers' purchasing process and the operation of your stores. Do customers prefer to receive your product at home, or do they prefer to pick up their order at the store? What about returns?
• Based on this assessment, determine the expected impact of the online shop on both the model and the cooperation with your franchisees.
• Propose how the costs of the online shop (including promotion and visibility) should be covered and how the revenue should be distributed.
• Discuss the intended agreements regarding the online shop with (a representation of) your franchisees. Important: also communicate the aforementioned assessment and impact, in other words, ensure a well-founded argumentation.
• Document the agreements in your manual and possibly create an additional appendix or addendum to each franchise agreement.
• The general terms and conditions must be adjusted and supplemented with provisions for online shopping.

A good practical tip is to evaluate the agreements made about the online shop after some time (and announce this in advance). The exact effects of e-commerce, no matter how thoughtfully considered, are often difficult to predict. If the franchisor clearly indicates on what basis a certain distribution of costs and revenues was decided upon, any necessary adjustments can be better justified.

Want to know more?

With a simple scan, we can make your franchise organization ‘e-commerce proof’ and guide you in the introduction of e-commerce. If you want to learn more, feel free to contact us for a non-committal discussion.