Franchising, CSR and the triple bottom line

Business Mirror, September 4, 2011
Armando O. Bartolome / Franguru
FRANCHISORS are believed to be the great moneymakers because they charge franchise fees, continuing fees like royalties and other license-related fees. So, all we need to find is that one concept that will click with investors or would-be entrepreneurs and we have that magic formula to wealth. For franchise applicants, they often almost beg a franchisor to choose them or their location for the brand’s next location. That is, if the brand is a hot one.
For new investors, beware of the franchise that is not hot, as it may also be a telltale sign that it is not profitable.

But what are the good signs that a franchisor is a good one?

Corporate social responsibility (CSR). Franchisors that are well and have made money also do well. They have a chosen mission of sharing the good they have received through CSR programs. One of these companies is Binalot, which has a “Dahon Program.” Binalot gets all its banana leaves from a community in Nagcarlan, Laguna, and has been doing so for about four years now. The little barangay is sometimes fondly called “Barangay Binalot.” The banana leaves supply project has given income to many senior citizens and even the youth. So, while Binalot gets a regular supply of banana leaves, which are clean and ready to use, the community also has a regular income. Binalot has also furnished their day-care center with books and furniture and has totally engaged the community leaders in a win-win situation.

Environmental consciousness. Franchisors that think long term are also conscious of the environmental impact of their business. Do they create a lot of trash? Can they now use reusable utensils in their dine-in outlets? Do they encourage the use of bottled condiments rather than use sachets just so they can keep track of costs? What packaging do they use for their delivery and takeout orders? Jollibee has started to use reusable and washable utensils in many of its branches.

Social consciousness. Franchisors that are responsible have a set of rules for hiring employees. Do they pay all the legal wages? Do they provide social-security benefits? Do they encourage longevity and tenure in their company? Check if they have long-staying employees and if employees rise up the ranks.

Spiritual consciousness. Do they have policies with regard to faith and observance of religious practices? Do they practice diversity in the workplace by encouraging different creeds among employees? Does the management encourage spiritual meetings or congregations? SM Supermarket even sends its employees to offer fruits and money in a Makati parish every Sunday.

Last but not the least, is it financially profitable? I will not argue that the first reason franchises are bought is because the franchisee wishes to go into business with less trials and errors and to make some financial profit. Very few go into a franchise “just to learn the ropes” or “to teach my children some discipline.” Most if not all franchisees get a franchise to make money. But in making that money, do we also give back to others who are less fortunate? In making that profit, do we also affect the environment in a bad way? Do we pay people in a fair manner?

CSR is not just for the giants like Jollibee and McDonald’s. Jollibee now gets its onions and peppers from farmers in Nueva Ecija. McDonald’s helps build schools for its future customers—the children. But see, even an SME like Binalot can have a CSR.

Often it is a challenge to sell CSR to SMEs. The owners are very busy running their everyday affairs that they would just rather do philanthropy, or give some of what is left over at the end of each fiscal year. True CSR, however, is not just about money. True CSR is about engaging communities and giving them sustainable livelihoods, and not handouts or doleouts.

SMEs are the best candidates for CSR because when a company is still small and private, the CEO or president can espouse a project closest to his or her heart. It does not have to be dictated by a global principal or a global strategy (as with most public multinational corporations). The president or owner of an SME can choose the size of the program so that it is meaningful to execute and it redounds to a good corporate reputation.

Why reputation? Because everything in business is about trust. And reputation builds trust. And trust is what makes a customer buy your brand.

Therefore, CSR builds reputation, and reputation builds trust. And trust builds business. So why should CSR be aligned with business? Because it is the only CSR that will flourish, and be sustainable over the long term and through generations.

In many surveys about consumer habits, consumers will more likely buy from a firm they trust, than a firm they do not trust. So, check the CSR of your franchisor. Often, it will show you how “real” the owners are.

Posted in Press Releases.