APPLICATION SERVICE PROVIDERS (ASP) IN FRANCHISING

Although information technology can add many benefits to the franchise system, the immediate question is: at what cost?  The investment in information technology could be very expensive and complicated.  Most franchise companies, especially small ones, find it difficult to invest in information technologies (Kennedy 1998).  However, a new type of service in information technology called Application Service Providers (ASP) promises to make information technology more economical and affordable to the franchise community.  According to the ASP Industry Consortium (www.aspindustry.org), ASP delivers and manages applications and computer services from remote data centers to multiple users via the Internet or a private network.

The ASP concept has added appeal in the franchising industry.  An ASP providing excellent services to its client can duplicate the success to other similar franchises quickly and inexpensively.  For franchising companies, an ASP can offer the benefits (Chen, Ford, Justis, and Chong, 2001) of: (1) reducing focus on the information technology issues; (2) reducing total cost of ownership of information technologies; (3) reducing time to deploy applications; (4) reducing the risks to develop, implement, and maintain the applications; and (5) reducing cost of recruiting, training, and retaining skilled information technology staff.

Using Table 4 as a guide, we recommend franchise companies to outsource data and information applications to ASPs.  There are four major reasons for doing so (Chen, Ford, Justis, and Chong, 2001):  (1) They are not core processes in a franchise business, activities related to the working knowledge of the franchise are; (2) They are routines and time-consuming; (3) It is cost-effective; and (4) It is more professional.

Keeping working knowledge applications in-house makes good sense, but a major challenge is to find ways to preserve and share the working knowledge learned over the years over the company’s intranet.  A “learning family” is where attitude, motivation, individual behavior, and group behavior can be improved.  Table 6 shows a Franchise Knowledge Repository framework proposed by Chen, Chong, and Justis (2000b).  The goal of this repository is to accumulate knowledge in the organization and allow easier access by franchisees or employees, thus reduce the barrier of knowledge acquisition.  By placing the knowledge repository on the company’s intranet, its accessibility is further improved.

Table 6. Franchise Knowledge Repository Framework