Interview

January 4th, 2006
The certification issues in the franchised networks

< Western Europe >


Interviewer : Yves Sassi
Interviewees : Philippe Gabillard (Expert in management through quality systems)

"The quality approach allows the passing from an oral company culture where everything can be questioned to a written culture where everything can be traced down"


You are an expert in management through quality systems. Certain franchise networks have already started the certification process. How can we evaluate the interest in this approach, even before starting it?
The issues regarding quality are particularly important and can be easily evaluated, to the extent that we estimate the cost of non-quality to translate into a reduction of performances of around 15 up to 20 % of turnover.
We can easily understand that it is a major issue, if we take into account a difficult situation and, especially as far as the franchised networks are concerned, we can refer to the competition between the brands. Imagine a franchisee candidate who has to choose between two similar brands, one of them being certified. It is obvious that this candidate will be more prone to choose the franchisor which has implemented a certification procedure. This guarantees the existence of a know-how that will be transmitted to the franchisee. Moreover, the franchisees’ clients will proceed likewise!
Having said that, the interest goes beyond a marketing strategy. Two aspects must be underlined here. A certified company improves its performances (turnover) and reduces its costs. The implementation of these tools brings along a reduction of the costs of that company.
Many types of costs are concerned
• The internal anomalies (scraps, repairs, absenteeism…).
• The external anomalies: warranties and clients’ complaints, discounts and rebates, penalties for the returns, delays, clientele loss, damages reimbursement, product responsibility insurance premiums primes….
• The detection costs: personnel in charge of product verifications, amortisation of the control material, benchmarking taxes, prevention costs...
Naturally, we add the productivity gains to all this.
It is often difficult for the entrepreneurs to perceive, in their activity sector, the productivity gains they can realise. But let’s imagine, for instance, a real estates agencies network. The certification allows a better monitoring of a client and, consequently, a reduction in the delays between the first contact and the signature. This is equally true for a trade that will succeed in increasing the amount of the medium basket and diminish the number of clients that leave without having bought anything. Here as well, we can understand the issue and the gains in terms of productivity.
Increasing the patrimonial value of the company
At the same time, a company that has successfully ended its certification procedure improves not only its daily activities, but also its financial performances. And it builds its customer loyalty and improves its visibility and its patrimonial value.
In case of company transfer, the negotiations will be eased and the social value of the parties increased!
The quality issue influences all relationship with the client. The franchisee candidate can be considered a client of the franchisor. Offering its franchisees a certified model is a mark of trust as well. This way, they will better succeed in their activity.

Do you think that certification will be the next step to be taken by the companies in order to validate their concept?
This certainly is the path we follow. The companies that want to develop healthfully will go this way and the franchisee candidates will naturally direct themselves towards them. Doubin’s law improved the relationships between the franchisor and the franchisee because it brings real working procedures.