The concept of franchising is definitely not a new one and can be traced back to the early days of governmental licensing and even the method used by the clergy for the expansion of churches. Modern concepts of franchising emerged in the United States in diverse business areas as drive in restaurants, fast foods, soft drink vending etc. The boom and a slump soon followed in the US as well as the UK during the 1950s and 1960s. Franchising again popular in the later decades and is now considered to be a powerful and well accepted form of business. In the UK it was the Singer Sewing Machine Company that can be credited with the starting of the modern concept of business franchising. “Its mass manufacturing production system allowed the company to sell the product at a very competitive price, but the company could not economically run a replacement part service as a central operation so it set up a service & maintenance franchisee.” (History of Franchising, 2008). Today franchising is one of the most effective ways of wealth and risk sharing and has necessitated in foolproof techniques that can carry the business forward in a profitable way for both the franchisor and the franchisee. This technique is referred to the service delivery system (SDS) and forms the backbone of any franchising concept. This paper looks at the importance of the SDS and the evaluation of the effectiveness of a properly formulated SDS.
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The Service Delivery System in franchising
One of the most important components of a franchise business is the service delivery system it operates. According to Francorp, a leading franchise consulting and development firm, “the key is that you start with an exceptionally sound baseline service delivery system.” (Frank Corp What Makes a Successful Franchise Company: Adaptability, 2008). There is more literature written about the importance of an SDS. According to the book ‘Franchising’, an SDS is the fundamental means by which the customer satisfaction in a franchising business is assured and also created a competitive advantage for the franchisees. “Every franchise has a well defined SDS, however overt or transparent it may seem to an outside observer.” (Spinelli, Rosenberg and Birley 2004, p.20). A well laid our service delivery system has the following advantages. It “Encapsulates the intellectual knowledge of the franchise as a business asset. Written instructions which add value to a business process are leased to third parties to generate a profit.” (Preparing the Franchise Package: Understanding the Business System. p.6).
Documental knowledge about the business system can help to reduce risk and also helps in formulating an effective training package. It helps to increase overall efficiency by facilitating the concept of repetitive action, which forms one the core fundamentals of franchising. Allocation of tasks and coordination within the business and with franchisee and franchisor is also made more effective. An SDS also helps in efficient running and bringing about uniformity of operations and tasks among all franchisees. It provides the detailed knowledge of doing the tasks and is basically what the franchisor buys in exchange for the franchise fee. The SDS is also the basic document which tells the franchisee what to do to meet the demands of the customer. (Service Delivery System).
Evaluation of an SDS
The importance of the SDS has been established and now the review of a sound system is being done here. This can be done on the basis of procedures followed in the evaluation of a general service delivery system and its quality. This will be done on the basis of a study conducted on the effectiveness of fast-food franchise outlets in the USA and Korea. The study included the following variables commonly referred to as SERVQUAL, which is a common yardstick to measure service quality. The variables are tangibleness, reliability, responsiveness, assurance, and empathy. An SDS should assure that tangible factors like “physical facilities, equipment, personnel, and communication materials.” (Chang, Lim and Kim, p.1230). Reliability of tasks and operations should be there to ensure quality. Responsiveness or the willingness of the staff to be of service to customers and to meet their requirements is another important factor. Employee should be made knowledgeable, courteous and should be able to impart a feeling of trust and confidence in customers. Also an element of empathy rather than sympathy should be taught to the employees in dealing with customers. The above mentioned study also adds that these factors were not adequate in fully evaluating the service delivery systems and added the following components to the study. They include sanitation (hygiene), location of the franchise, the parking facilities available, the quality of the service (in this case food), the environment in which the franchisee is situated and the image or perception of customers about the franchising company. All the elements if properly ensured can give a high evaluation rating to a service delivery system in any franchise business.
- CHANG, Daesung., LIM, Seongbae., and KIM, Hwanyong. A Comparative Study on the Service Quality of Global Fast Food in USA and Korea: Evaluation of Service Quality. [online]. 1230.
- Frank Corp What Makes a Successful Franchise Company: Adaptability. (2008). [online]. PRLog: Free Press Release. Web.
- History of Franchising. (2008). [online]. The UK Franchisee Directory.
- Preparing the Franchise Package: Understanding the Business System. [online].
- Service Delivery System. [online].
- SPINELLI, Stephen., ROSENBERG, Robert., and BIRLEY, Sue. (2004). Establishing the Service Delivery System(SDS): How Does the FRM Provide a Framework for Marshaling Resources. [online]. Franchising. Web.