By Frank Treanor Best Practice Business Strategy ProProcure 1st September 2016

Simplifying Transactional Procurement for Local Franchisees

How do you manage transactional procurement in a multi-layered stakeholder business? In any large global corporation, there is always a stronger element of control over individual behaviours and compliance than in a franchise model. After all, employees can be officially reprimanded and cautioned for not following the company line and sticking to procedures. But in a franchise, once the ‘licence’ has been purchased it effectively becomes another individual’s business and the rules can more easily be ignored or regarded as guidelines.

There are some areas of a franchise’s operation, however, which are essential to its global brand; and no compromise should be allowed when managing those from a central position. Compliant and managed procurement, both CapEx and consumables, is critical for most global franchise organisations, especially those operating in the food and hospitality markets.

Maintaining congruency in global food chains

One of our clients recently started using Geneus to help them manage some of these complex procurement issues within their Middle Eastern region franchisees.

Like many of the major restaurant and fast food brands around the world, our client operates as a franchise, selling the use of their process and brand to independent operators in specific geographies. They had a number of ongoing issues to overcome when looking to manage standardisation and quality compliance across their network. ProProcure’s Geneus platform was able to deliver real solutions and control for them.

  • This project involved supporting the purchasing activity of individual franchisees within a dozen countries across the Middle East and North Africa.
  • Each franchisee purchases independently from approved suppliers with no transactional involvement from the central purchasing division
  • All purchasing is conducted in the local currencies of each country and needs to encompass various other local restrictions and regulations

A Geneus marketplace was created which enabled each franchisee to place orders or make enquiries in the local currency and deal directly with approved suppliers to purchase the necessary goods. So buying approved and compliant products becomes the easiest, most cost-efficient option for all of the franchisees – ensuring standardisation is achieved globally.

This means that the owners of the brand (the franchisor) can effectively manage the complexity of the different regions, products, languages and payment preferences without being drawn into transactional procurement at a central level. This additional control and standardisation of purchasing means that the company can achieve new economies of scale for buying and sourcing. In addition to the food product being sold around the world, Geneus also manages the procurement of other important elements of the business: including in-store serving materials and equipment.

Some of the franchisees are now so large that they have their own warehouses and stores. So Geneus enables inter-franchise procurement to be activated, where stock and equipment can be bought and sold between themselves.

A huge global network managed centrally!

The result of using Geneus is that every transaction made locally by each one of the 1000s of individual franchisees can be tracked, monitored and managed. This ensures compliance and brand continuity is maintained throughout the network from a centrally managed position.

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