Many of the articles we read about retail and franchising focus on strategic issues. However, occasionally it is prudent to focus on the detail.
According to our friends at the Retail Doctor, on average around 75 per cent of shoppers who looked at your displays, entered your shop or visited your website did not buy anything. Imagine if that figure could be reduced to even 50 per cent. “Out of stock” situations can account for up to 15 per cent of lost sales, and “overstocked” situations can cost around 25 per cent in each dollar. Then of course there is the extra dollars you could obtain from suppliers if you could give suppliers guaranteed greater loyalty in purchasing. Fix all of these things and the results go straight to the bottom line of franchisees and franchisors.
These are business issues, but there is a legal aspect. In our experience most of the lost dollars in a franchise network result from failures in business compliance. The Franchise Agreement is usually adequate, but the Franchise Manual rarely properly facilitates improved business compliance. And in some cases it contradicts the terms of the Franchise Agreement. Similarly supplier arrangements are unnecessarily loose and informal, sometimes because franchisors do not realise that they can often use the Notification process under the Trade Practices Act to enforce stronger business compliance.
As you return to work happy and refreshed, take the time to conduct a business compliance assessment so you can better control the prosperity you enjoy in the new year.