The franchise regime, growth engine
DIA has approached its franchise regime as an integral component of its business for over 25 years now; today that regime is an essential growth driver. At year-end 2013, the number of franchised establishments accounted for 40.8% of the total store network. Its track record in the retail sector, the value of its brand, the efficiency of its logistics system and its ability to transfer its know-how to the franchisee, reinforced during the year by new communication channels, rank DIA’s franchise model among the top 15 in the world.
Over the past two decades the franchise has emerged as a fundamental growth facilitator at DIA, having proven its ability to create wealth and jobs in the countries in which the regime has been implemented. The number of franchises worldwide increased to 2,991 in 2013, while the number of jobs created in this segment rose to 20,188.
Several factors underpin DIA’s success as franchisor: its know-how, a well-defined corporate identity, strong support for franchisees and the ability to innovate.
Thanks to these criteria, international consultancy Franchise Direct ranks DIA #15 in its list of the Top 100 Global Franchises. Within Food Sector: Supermarket & Convenience Store Franchises, DIA ranks #3 in Europe and #1 in Spain.
DIA ranked one of the top 15 global franchises in 2013 by consultancy Franchise Direct
The synergies between DIA and its franchisees constitute one of the company’s main competitive advantages relative to its rivals: while the entrepreneurial franchisees benefit from the company’s know-how, leadership and competitiveness, DIA taps these professionals’ valuable insight into their local markets in order to tailor its product ranges to customers’ preferences
4.2.1 Franchisees, DIA’s finest ambassadors
DIA’s franchisees are excellent brand ambassadors. Thanks to their dedication, ability and commitment, they turn every purchase into a pleasurable shopping experience.
Their backgrounds are increasingly professional and specialised. They exhibit independence and initiative in managing their stores and employees, ultimately contributing valuable know-how to development of the neighbourhood shopping strategy, the lynchpin of DIA’s business model.
All of DIA’s retail formats are ‘franchisable’. In addition to offering a broad range of store formats, the company occasionally offers small retailers in rural areas the possibility of selling DIA products in their lifelong stores without necessarily having to transform their establishments to a DIA format. This concept has been coined “Every DAY” (punning DIA).
In all cases, DIA shares its know-how, providing its franchisees with support before, during and after the store opening.
Upfront, it offers potential franchisees financial support for starting up their businesses with the help of associated financial institutions. It also collaborates intensively throughout the entire business start-up process (searching for the right premises and assisting with the technical, assembly and advertising aspects of the launch) and provides ongoing information, training and assistance.
DIA’s commitment to ensuring its franchises perform well takes the form of several initiatives which range from training courses at DIA centres and online to the provision of assistance and advice to store supervisors.
In 2013, DIA continued to provide training at the franchise network supervision level and designed a new information plan for franchisees. This plan includes the extension of training hours provided upfront, the appointment of a special franchisee training position and the rollout of the DIATraining e-learning platform.
4.2.2 Greater company-franchisee collaboration
Due to its weight in the sales network, engaged dialogue between the company and its franchisees is crucial to DIA’s growth. In recent years, the parent company has developed a number of different internal communication channels that allow it to transmit important information and test franchisee satisfaction, while also getting feedback from them on what they need to improve their product and service offerings.
The company provides online assistance through the franchisee portal. On this website, use of which is restricted to franchisees, members have access to information on product ranges, can track orders and find business, sales and other relevant information for managing their stores. They are also given access to databases with information on their own performance and comparative statistics. A messaging service enables them to get in direct contact with the company.
The company provides assistance online via the Franchisee Portal and has dedicated channels for communicating with its franchisees in each market
In addition to this global portal, each country has its own specific franchise communication and service channel; these channels are updated annually and used for exchanging know-how.
In Spain, Portugal and France, franchisees regularly receive a newsletter updating them on the latest company developments. These three markets also manage a public-domain website, developed in Spain in 2013, for informing potential franchisees of the advantages of joining the company’s business endeavour.
In order to provide its entrepreneurs with a better support network, DIA launched a ‘Strategic Partner Service Centre’ (CASE for its acronym in Spanish) last year which operates by phone and e-mail. This platform has been pilot tested at a select number of stores and the idea is to roll it out to all of the country’s franchisees in order to facilitate the resolution of any issues that may arise in the course of their business operations. This initiative emulates the platform already in place in China (albeit operated by phone only in the latter market).
In Brazil, where franchises represent 50% of the store network, DIA also worked to improve relations with its franchisees, creating a Franchisee Ombudsman to serve as mediator between the company and its franchisees, resolve queries and solve potential business management issues.
DIA organised a focus group initiative in its head offices during the fourth quarter of 2014. Through a series of group exercises, the roughly ten franchisees participating in the focus group from all over Spain expounded the strengths and weaknesses, pros and cons, of their everyday work, their vision of the company, their aspirations and their suggestions on how to do things better.
The goal of these focus groups is to improve communication between DIA and its franchisees and to establish a direct line for analysing the strengths and weaknesses of the DIA-franchisee relationship. It is also designed to transmit the brand’s values and attributes and the group’s communication strategies to the franchisees.
In Argentina, the Opinion Café initiative stands out; at this forum, franchisee entrepreneurs are given the chance to meet with DIA’s executives in Argentina and voice their concerns and opinions about the business. The local business also runs a number of initiatives for attracting new franchises, including a recommendation campaign that is targeted at all DIA Argentina employees and strategic partners.
In order to continue to better address the business aspects of greatest concern to franchisees, the company carried out its second DIA Franchisee Satisfaction Survey in 2013. This barometer, compiled by independent consultancy Nielsen, was first compiled in 2012 and the idea is to carry out the survey at least once a year in light of the high participation and all-round interest in the results.
This second survey revealed that 50% of the franchisees polled felt that their initial business expectations had been met, 57% would recommend the experience, while as many as 37% envisaged opening new franchise stores in the near future.
As in earlier years, the attributes most highly rated by franchisees included the quality and competitiveness of the DIA brands, the Club DIA/Minipreço loyalty program and the range of offers and promotions.
The barometer also confirmed franchisees’ interest in submitting their opinions directly: over 90% of franchisees answered this open-ended question. Building on their suggestions, the company is working to introduce improvements in the logistics and communication fields.
4.3.3. A winning franchise formula
DIA’s franchise model and its individual franchisees continued to earn notable accolades in 2013.
In Spain, where the company operates over 1,450 franchised establishments, DIA received the national prize for the best retail sector franchise at the SIF (acronym in Spanish International Franchise Platform) Trade Fair in Valencia. Specifically, this franchise association highlighted the DIA Market format’s "consolidation and strong development in the Spanish market".
In terms of individual franchisees, José Antonio Sánchez Aylón, a DIA franchisee for over two decades, was named best franchisee in Spain at the Best Franchise of the World event forming part of the international Expofranquicia 2013 trade fair taking place in Madrid; he was also a runner-up in the third edition of this prize ceremony in Florence in December. The jury awarded him this prize in acknowledgement of his everyday management and the healthy numbers presented by his DIA Market store in the Zaragoza town of Daroca, which employs eight people.