Chapter 3 Methodology
4.3.4 Innovation
The data emanating from questions regarding the franchisees' innovative ability and allowances within the franchise system is crucially infonnative when taken in the context of entrepreneurial capacity enhancement.
Ten out the twelve franchisees responded that they were able to apply innovative practices at some point during their franchise experience. Of the other two, Mike explicitly refused to innovate as he believed it was contrary to the spirit of franchising, while Nick was ambivalent and had not seen the need to innovate up until that stage.
The first important point to come out of the discussions with those that did innovate was that all innovation was subject to franchisor approval. There was no instance where a franchisee made significant changes outside of the format and standards of the franchisor and then kept up with that without the franchisor's agreement.
Secondly, franchisors were seen to support the generation of new ideas and concepts from the franchisee. Conduits exist to ensure that innovative ideas are channelled into the system. More often than not this happened at regular meetings called marketing fOlums or franchisee forums. The regularity of these meetings ranged from monthly, to bi- monthly, quarterly and annually. In cases where there was no such f0l111al channel, the franchisor was considered to have an open-door policy and the franchisee was able to
approach and suggest innovations or creative ideas on an ad-hoc basis. In several instances it was explained that franchisors would try out franchisee suggestions at company-owned stores before taking them through the system. This was seen as advantageous as there was no real risk to the franchisee in the event the innovation was not successful.
• The other good thing is that they will always test out new things before passing them on to you. They will run it in a company owned store first and then decide
if
it will work or not (Yvonne)Of further interest was the different type of innovative practices that emanated when participants were asked to describe examples of their innovative practices. In using the grouping structure of Johannessen et al (200 I), one can clearly see the emergence of various categories of innovation:
• New products - They never had a veggy line. I found my own supplier, which they approved, and now I am the only store with a veggy line. Its because of the Indian market you see, and now I am also looking at a mutton line (Yvonne)
• New services - we are also going to be trying out afew new t/zings, like offering computer training courses in the evening (Nellie)
• Opening new markets - The examples of Yvonne above and John who initially began attracting sports enthusiasts to his security shop by offeling products such as high-powered pellet guns and sporting knives.
• New sources of supply -the supplier walks into the shop ... ! could look at it and say its not a bad idea and it could pass, and I could say
if
you could get a hold of this gentleman (the franchisor) he then will evaluate you as a supplier and the product, they thell will do the research, they take you to some shops and you would sell andif
it is sllccessjiti they put it into the store for us to buy or they give us the contact details and you buy directly from them (John)• New ways of organizing resources - Gero, Ashley and Brad described how they were able to make some of their processes more effective and efficient. Gero found a method of tracking her machines' utilisation rates and in doing so see where there was excess capacity and then try to fill that specific function. Ashley
designed a workflow method that gave priority of output to his highest paying customers and Brad was able to implement a system that was able to speed up and fully track his jewellery repairs through their repair process.
Although vatious categories emerged in terms of Johannessen et ai's (200 I) grouping, it must be stated that the purpose of the innovations displayed by the sample group was more consumer oriented and were typically implemented to increase the satisfaction levels of the clientele base. Ashley explicitly mentioned this when describing the environment under which he was able to innovate: the model is pretty rigid because you working within a framework that's pretty regulated (his franchise's business environment) and also velY highly ethical and disciplined, so innovation can open us up to other risk factors with regards to poor quality of work etc therefore ...
if
you had to look at our innovation it would be purely on the basis of assistance or in terms of customer centricity, those types of innovation that would support the core business but would not change the core business ...This prevalence of consumer-Oliented innovation within the franchise system is exactly as professed by Maisonneuve et al (2003). These authors also mentioned that it was consumer oriented innovation that fOlmed the basis of new venture creation, leading us to suggest that the franchise system is conducive to stimulating the type of innovative behaviour that is prevalent in entrepreneurs.
The focus group agreed that franchise relationships allow for franchisee innovation and creativity. It was stated that franchisees are seen as the customer interface and good systems have marketing forums or other channels where new ideas, product or otherwise are brought to the fore. A common franchising anecdote was mentioned: "9 out of 1 0 new prodllcts in McDonald's were franchisee ideas n.
The evidence allows us to contIibute to the debate on whether franchising allows for innovation. We find that the majolity of our sample practiced valuable and varied
innovative activity. Franchisors did exert control over the process but were also found to be supportive of it in the main.
We concur with the views of authors such as Ajayi-Obe et al (2006), who argue that franchisees are able to undertake meaningful innovative activities within the paradigms they operate in. Our data was obtained through a different reporting line21, but the findings are similar. Further to this we find that the franchise system tends to generate the type of innovative activity that is new venture stimulating in nature.