One of the advantages of buying into an already established franchise is the fact that methods of supply, procurement, production as well as sales and customer service have already been established by the franchiser. As such, entrepreneurs won’t have to worry about having to establish such systems themselves which can take considerable time and effort. Another factor to take into consideration is the fact that established businesses already have a well-known reputation within a local community and, as such, results in constant customer patronage by long time customers of the franchise.
It is usually the case that new businesses have to work hard to ingrain themselves into the awareness of members of the local community through various marketing campaigns which can cost considerable sums with the possibility of such activities having little impact on consumer brand awareness. This is why various franchises take pride in stating that their years of experience within a particular state have made them so well known that most people within various local communities are well acquainted with the brand. However, as franchises continue to expand into new states, a problem emerges when it comes to brand quality management.
The Problem
When a franchise expands into a new location, it often enlists the help of vendors (i.e. entrepreneurs) in order to share in the cost of expansion. The problem though is that some entrepreneurs buy into an established franchise and then subsequently change various aspects related to operations, marketing and production in order to better suit their needs. While they may mean well, this creates a considerable level of vendor risk since they are changing a well established formula for operations and product creation in favor of a method that may benefit them more. While it is understandable, the fact remains that changes to standard operating procedures can have a detrimental impact on the brand of the franchise as a whole, especially in locations that they have only recently expanded into.
Negative Effects of Improper Vendor Risk Management
In the case of franchises expanding into new locations, instances of tarnished reputations or negative consumer feedback regarding products or services associated with the brand image of that particular company often continue to “haunt” the new franchise so to speak despite saying that the experience of the customers is not indicative of the brand as a whole.
This shows why franchises need to keep a better eye on their franchisees when they expand since negative perceptions without sufficient established brand reputation would put all effort into expanding into the new market in vain. For more information visit Compliance Education Institute.
