Sunday, October 21, 2007

Does the franchise system market for customers?

Reading Achieve maximum market optimization with minimal “cannibalization” of customers through customer analytics. from the International Franchise Association raised some interesting questions. Noe of which I have any concretes for and which is why I am tossing them out here. This paragraph describes the subject of the article pretty well:

"If optimizing retail markets is so essential, one would guess that retail franchises have developed incredibly effective methods to measure the affect of one store on another when selecting retail sites. Believe it or not, this all-important issue is often left to guesswork."

The article then goes into detail about using customer analytics for determining the best site for a franchisee's operation and the details are worth reading.

My questions:

  1. With customer analytics being available, should not the franchisor use this method for selecting sites?
  2. Should the franchise disclosure state whether or not customer analytics were used in determining franchisee sites?
  3. The article premises franchise failure on failing to market to the customer, how accurate is this premise? Does this explain the failure of otherwise good franchise systems?
  4. Ought potential franchisees question more than the usual franchise system but also the systems' demographic and other marketing assumptions?