Abstract (Summary)
The marketplace is certainly challenging enough that franchise businesses would like to avoid the thoughts of having to deal with a crisis in their businesses. The challenge is to establish a strategy to deal with a potential crisis that may or may not occur, whose origin is currently unknown, but could be generated from a number of sources, that will generate unknown consequences, but which has the potential to be significant, and could affect a number of factors of the business while people are involved in daily operations. Once senior management's support for the development of a crisis-management plan has been established, a champion has been identified and the franchisor has developed a relationship with franchisees for their involvement, the next step is to proceed with implementing the plan. The crisis-management strategy and implementation must be continually evaluated, just as companies continue to assess the business environment in which they operate in every day.
Full Text(1229 words) |
| [Headnote] |
| Do not underestimate the potential risk and costs of a crisis. |
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| [Photograph] |
The marketplace is certainly challenging enough that franchise businesses would like to avoid the thoughts of having to deal with a crisis in their businesses. Besides, organizations would have a lot more issues to deal with than speculating if a crisis can or will happen to the business, much less preparing for it. Unfortunately, most crises don't recognize those challenges or how busy people are and will frequently occur at the most inopportune times.
The reality is that crises can be both internally and externally driven. They can happen gradually or in a moment's time. The genesis of the crisis can be weather-driven (Hurricane Katrina in the Southeast, flooding in the Midwest, fires on the West Coast), a simple misstatement by an employee or executive, a food-borne illness, or even the financial performance of a business. Name it and there is the potential for a crisis.
Think about such examples as Johnson & Johnson and Tylenol, Audi with the "sudden accel- eration" associated with their product (although it was never proven to have actually occurred as a result of a defect in the car), or recently the tomato industry with the salmonella illnesses. Perhaps it's a computer-system failure or consumer information data that is compromised. Think of the franchising industry with the bankruptcy of a franchisor, the sale of the system and its impact on the franchisee. Every one of these, and many more examples that anyone might have thought of, had an enormous affect on the brand, its employees, customers, and franchisees, much less the financial and psychological ramifications.
I have had the pleasure of listening to MotoPhoto Pres, and CEO Harry D. Loyle, CFE, and Jack In The Box Inc. Division Vice Pres. Michael Bamrick, CFE, share their experiences in dealing with crises with their companies. Loyle spoke of the essential elimination of the marketplace almost overnight with the introduction of digital photography and Bamrick has eloquently spoken about the emotional and financial consequences of the E. coli incident in 1993. Both of these successful companies have had to deal with crises that no one might have anticipated.
The challenge is to establish a strategy to deal with a potential crisis that may or may not occur, whose origin is currently unknown, but could be generated from a number of sources, that will generate unknown consequences, but which has the potential to be significant, and could affect a number of factors of the business while people are involved in daily operations.
Developing Your Strategy
One of the key elements in establishing a strategy for crisis management is the ownership of that effort. Senior management must embrace, support and set the direction for these efforts. If the organization does not see that involvement, the effort will never receive the attention or provide the value that it needs to provide.
Secondly, identify a champion for developing the strategy who has the respect of the organization and ability to effectively manage the effort. Ensure that it is a priority for the organization and that adequate resources are committed to the effort.
Whatever strategy the company develops, it is important that it reflects the franchise company's core business principals.
Involve franchisees in this process. Any crisis that may potentially impact the brand (franchisees' most valuable asset), their operating environment and support levels will affect them. Whether it is through an advisory council representative or key member of the franchise organization, their input will be invaluable to establishing the strategy, as well as creating credibility with the franchise community in its value.
Has the franchisor considered the affect on ownership, banking or funding sources, vendors, landlords, employees and their families in the event of a crisis?
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| [Photograph] |
In determining who should be involved within the organization in the development of the strategy, think about the disciplines that would be most affected by a crisis: operations, legal, marketing, public relations, franchising and finance and ensure their representation and ownership in establishing the strategy and tactics for implementation.
Do you have any members of your organization who have been involved in a crisis situation before? Have you spoken with other companies that have dealt with a crisis? What have they learned; how did they establish their strategy? Have you checked with professional organizations within your industry for sources of crisis management materials, programs, and so forth?
As the franchise organization moves through this process, some key elements to consider include:
* Based on the industry, prioritize the potential sources of a crisis such as food-borne illness or employee safety.
* Ensure the franchisor has identified those who would be affected by a crisis; what is the potential impact?
* If the crisis occurs, what does the company do, whom do you communicate to and how, who are the decision makers, what is communicated internally and external?
* How does the franchisor communicate the strategy and plan? What training may be required? How often should the plan be reviewed?
* What does the ongoing recovery plan look like?
Implementing Your Strategy
Once senior management's support for the development of a crisis-management plan has been established, a champion has been identified and the franchisor has developed a relationship with franchisees for their involvement, the next step is to proceed with implementing the plan.
* Do your homework.
* Develop a written plan that reflects core principles and values. What is the objective of the plan?
* Be sure there is input and ownership of the key stakeholders.
* Develop a communications strategy that extends to both your employees and franchisees. Be sure it has been communicated to the appropriate third parties whether it is a financial source or vendors.
* Ensure there is review of the plan and provide the appropriate training to support its execution. Make it a point of reviewing the plan with franchisees.
* Plan periodic reviews of both the strategy and implementation strategy. Does it reflect the current business environment? Is your risk assessment up to date?
* Are there additional resources the franchisor should be committing today in the form of risk management to manage and minimize the cost of a crisis event?
* What steps are being taken to recover from the crisis? How does the franchisor ensure its brand's integrity following a crisis?
In the unfortunate event that a franchise company has a crisis to address, it is essential that it does a full assessment of what it learned, how the plan reacted and what additional modifications or training may be needed for the future. The crisis-management strategy and implementation must be continually evaluated, just as companies continue to assess the business environment in which they operate in every day.
Do not underestimate the potential risk and costs of a crisis, regardless of the form it may take to your business. It is essential that part of your overall business planning involves being proactive in developing both a strategy and implementation plan to deal with any potential crises.
| [Sidebar] |
| Identify a champion for developing the strategy. |
| [Author Affiliation] |
| By Bruce V. Bloom, CFE |
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| [Photograph] |
| [Author Affiliation] |
| Bruce V. Bloom, CFE, is principal/member of Bloom & Associates, LLC. He can be reached at bvbloom@aol.com. |
| Bloom serves on the IFA Franchise Relations Committee. For more perspectives on franchise relations, visit FRC online at IFA 's Web site, www.franchise.org, by selecting Member Resources, Publications and Franchise Relations Documents. |
| Subjects: | Franchisees, Management of crises, Strategic planning |
| Classification Codes | 2310, 9520, 9190 |
| Locations: | United States--US |
| Author(s): | Bruce V Bloom |
| Author Affiliation: | By Bruce V. Bloom, CFE Bruce V. Bloom, CFE, is principal/member of Bloom & Associates, LLC. He can be reached at bvbloom@aol.com. Bloom serves on the IFA Franchise Relations Committee. For more perspectives on franchise relations, visit FRC online at IFA 's Web site, www.franchise.org, by selecting Member Resources, Publications and Franchise Relations Documents. |
| Document types: | Feature |
| Document features: | Photographs |
| Publication title: | Franchising World. Washington: Jan 2009. Vol. 41, Iss. 1; pg. 55, 3 pgs |
| Source type: | Periodical |
| ISSN: | 10417311 |
| ProQuest document ID: | 1646123991 |
| Text Word Count | 1229 |
| Document URL: | http://proquest.umi.com.libproxy.nlb.gov.sg/pqdweb?did=1646123991&sid=5&Fmt=4&cl ientId=13402&RQT=309&VName=PQD |
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