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Corporate Social Responsibility and Generation Y: A Critical Convergence for Franchising

The revolutionary and dynamic franchise model has generally benefited from various societal dilemmas and transformations, attracting entrepreneurs and accountants alike, to own and operate their own businesses. Franchising may be lagging behind two very important forces that are effectively and permanently changing the global marketplace. Unless deliberate and significant attention is given to both, franchising’s storied tale may find itself on a very slippery slope.

Catching the Wave of Corporate Social Responsibility
Corporate social responsibility or CSR is a mainstream consideration in American business with 80 percent of the Fortune 500 companies addressing CSR issues. Four out of 10 corporations are adopting a formal program to put their position on a social issue front and center. While scholars still argue over a clear definition, the business community has concluded by its actions that it is an essential component of strategic planning.
Consequently, consumer expectations have summarily risen with each passing social campaign to resemble a competitive arena of “one upmanship.” It is difficult to read the daily business journals without a story per page related to a specific social effort by companies large and small crusading toward a plethora of causes, bolstered by marketers that espouse the virtues of strumming consumer heart strings. The research is compelling; suggesting that if a consumer is aware of a CSR strategy in your company but not your competitors, they are seven times more likely to do business with you. Multiples like that might even have led Milton Friedman, the famous conservative economist, to soften his rhetoric on mixing social good with the business of “making as much money as possible.” However, since a consistent or reliable measure of CSR activity does not now exist, either in terms of impact on society or value to the firm, it appears to be a current day proverbial gold rush.

Franchising and CSR
Conspicuous by its relative absence is the sector at large, franchisors have yet to effectively enter the CSR fray. There are some anecdotal efforts to add charitable logos to websites, support local and regional affinity causes through franchisees and even some national “special offers” (remember the “buy a Blizzard campaign at Dairy Queen”?), but in contrast to corporate America, franchising is clearly lagging behind. Some of the larger brands have undertaken a systematic effort to engage CSR across their networks such as McDonald’s and its Ronald McDonald House program, and YUM! Brands with its annual reporting of CSR activities. Yet, with the ranks of franchising approaching 3,000 unique brands, by and large there remains a strategic CSR void. While that may seem prudent given the nascent nature of CSR, there is one undisputable fact that will play a significant role in the outcome: the influence wielded by Generation Y or Millennials as they are sometimes labeled. This coming tsunami of late teenage to mid-30 year-olds currently makes up about 25 percent of the U.S. population. They have a distinct and inherent demand for meaning in their world and even the most modest of franchisors without a clearly defined CSR strategy should prepare to be left behind. If the franchise community is tempted to embark on a window-dressing approach or “me too” strategy, Gen Y will not be impressed as customers, employees or franchisees. It will require strong leadership, a clear commitment and an engaged effort to win their loyalty on all fronts.

Understanding Gen Y
Who is this Gen Y, what moves them and how do you appeal to them? There is a fundamental difference between how to reach them and the marketing strategies used to attract them. It’s not as easy as putting a message on a social media platform, tweeting that your business is doing something in the community or posting a daily deal coupon on the hottest new mobile app. These tactics may get their attention, but will have little bearing on how successful your brand will be in making them a customer, engaging them in your workforce or getting them to invest in your franchise.
If your franchise can successfully achieve creating a brand that resonates with Gen Y, it will be poised to reap the benefits of a very entrepreneurial group.

Unless your business is willing to understand their perspective, it is likely to miss the mark on the true strategies that will drive them to action. Just because something looks good on the outside, doesn’t mean that they will jump to buy it. Many sectors are underestimating their intelligence, buying power and influence in the global economy.
A recent study of Gen Y by MetLife characterized Millennials in three ways: Self-confident, optimistic and questioning. Your organization can be sure that Millennials are going to leverage technology to dig deep into your brand and find the real reasons that it is in business. They will read every review, turn over every stone, and make sure they connect with your brand, and believe in what your business does. But it doesn’t stop at merely believing; it manifests itself into a sense of duty that has been engrained in them throughout their childhood. They believe it’s their purpose in life to make a difference in the world and in the lives of others. This is the key factor that can gain allegiance for your brand and ultimately get them to engage with your franchise.

The Prize for Success
If your franchise can successfully achieve creating a brand that resonates with Gen Y, it will be poised to reap the benefits of a very entrepreneurial group. According to the Kauffman Foundation, nearly 30 percent of entrepreneurs are 20-34 years of age. That’s a staggering statistic. The beautiful thing about Gen Y is that if one believes in something, one will make sure that others know about it too. If your brand can secure one Gen Y franchisee, imagine how quickly word will spread to his burgeoning network of other driven, motivated and optimistic peers who are ready to use the systems and brands that have been put in place to change the world? Gen Y thrives in a viral world where word of mouth spreads like wildfire. It could be the single most important factor to accelerate your brand to the next household name, a name that is synonymous with a belief, an ideal, and a mission to create successful business owners, and to change the landscape of the future.

The Marketplace of the Future is Here
It would be nice to have the luxury of waiting for the CSR and Gen Y cards to play out, but unfortunately, that may not be the case for franchising. Franchisors must become deliberate and diligent in developing a clear understanding of Gen Y to intercept this multitude of consumers, customers, franchisees and suppliers. One strategy must include addressing where your company stands relative to its commitment to society and the ever-growing issues that are affecting daily life for so many. Absent that component, it is not likely Gen Y will be interested or engaged.
So, where does a business start to create a convergence of CSR and Gen Y in its strategic planning? Consider this: some estimates place the number of persons with a disability in our country at over 10 percent of the population (and it is the only minority group anyone could become a part of at anytime during their lives). Which franchisor will be there for them, and what kind of an impact might it have on their franchisees, supply chain partners and prospective franchisees? Giving that some thought might start companies on a journey to ensuring a convergence is in their future. 

Benjamin C. Litalien, CFE, teaches the Franchise Management Certificate program at Georgetown University and is the 2011 Karp Research Foundation Award winner for his research on “Social Franchise.” He can be reached at ben@franchisewell.com.

Jason Miller, CFE, is a “Gen-Y” brand manager for ZorSource, a division of FranchisESource Brands International. ZorSource offers a variety of valuable services from helping franchisors to find motivated franchise buyers, to offering proprietary coaching programs to assist franchise companies in becoming high-performance organizations. He can be reached at 203-405-2142 or
jmiller@zorsource.com.

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