Paper to be presented at the EMNet-Conference on
"Economics and Management of Franchising Networks"
Vienna, Austria, June 26 – 28, 2003
www.univie.ac.at/EMNET
Impact of Workflow System on the Information Flows and
Communication in Franchising Networks
Jiří Verberger
Faculty of Management and Economics
Tomas Bata University in Zlin
Mostní 5139
76001 Zlín
Czech Republic
Tel: 042 576 037 316
e-mail: verberger@fame.utb.cz
Abstract
The article deals with a support for the coordination in franchising networks by using workflow implementation
into the information flow and communication structures between franchiser and franchisees. This support can
make process redesign and reengineering at the same time. The processes are faster, cheaper, brief, better
addressed and controlled, moreover with lower costs. With a view to the franchising system decomposition, it’s
directed on the information exchange in relation of material processes. The paper is divided into 3 parts. First is
about workflow: definition, models, key benefits of workflow etc. Second part is the extract from the research
which author did in all Czech franchising firms registered in Czech Association of Franchising with a view to
the communication and information flows between franchiser and franchisees. Third part analyses the
determined flows in case studies in three firms which author has chosen.
Keywords
Franchising Networks, Workflow, Process Analyse, Redesign and Reengineering,
I.
Theoretical base
A. Introduction
In comparison between successful and non-profit firms we haven’t found big difference in
employees qualification or material equipment, both types of firm are similar, but there is
another approach in meeting the targets from comparative sources – so there is the another
processes design, more effective and better managed processes.
B. Workflow Definition
The workflow process is traditionally defined in office terms—moving the paper on
company, processing the order to franchiser and issuing the invoice. But the same principles
and tools apply to filling the order from the warehouse, assembling documents, parts, tools,
and people to repair a complex system on Franchisee Company.
Workflow is defined as the computerised facilitation or automation of a business process,
in whole or part. Workflow is concerned with the automation of procedures where
documents, information or tasks are passed between participants according to a defined set of
rules to achieve, or contribute to, an overall business goal. Whilst workflow may be manually
organised, in practice most workflow is normally organised within the context of an IT
system to provide computerised support for the procedural automation.
A Workflow Management System is one that provides procedural automation of a business
process by management of the sequence of work activities and the invocation of appropriate
human and/or IT resources associated with the various activity steps. So, It is the system that
completely defines, manages and executes “workflows” through the execution of software
whose order of execution is driven by a computer representation of the workflow logic.
An individual business process may have a life cycle ranging from minutes to days (or
even months), depending upon its complexity and the duration of the various constituent
activities. Such systems may be implemented in a variety of ways, use a wide variety of IT
and communications infrastructure and operate in an environment ranging from small local
workgroup to international franchising networks. The WFMC Reference Model/4/ thus takes
a broad view of workflow management, which is intended to accommodate the variety of
implementation techniques and operational environments, which characterise this technology.
The Reference Model describes a common model for the construction of workflow systems
and identifies how it may be related to the franchising network approaches.
WFM systems may be characterised as providing support in three functional areas:
 The Build-time functions, concerned with defining, and possibly modelling,
the workflow process and its constituent activities
 The Run-time control functions concerned with managing the workflow
processes in an operational environment and sequencing the various activities to be
handled as part of each process
 The Run-time interactions with human users and IT application tools for
processing the various activity steps
Fig.1: WFM system characteristics /4/
The Workflow Reference model has been developed from the generic workflow
application structure by identifying the interfaces within this structure that enable products to
interoperate at a variety of levels. All workflow systems contain a number of generic
components, which interact in a defined set of ways; different products will typically exhibit
different levels of capability within each of these generic components. To achieve
interoperability between workflow products a standardised set of interfaces and data
interchange formats between such components is necessary. A number of distinct
interoperability scenarios can then be constructed by reference to such interfaces, identifying
different levels of functional conformance as appropriate to the range of products in the
market.
Franchising
process
definition
Workflow enactment service
Tools for
process
management
and control
Workflow
core
/engine/
Another
workflow core
Interface
Client
applications
Invoked
applications
Fig. 2: Workflow reference model for Franchising
The workflow enactment service provides the run-time environment in which process
instantiation and activation occurs, utilising one or more workflow cores, responsible for
interpreting and activating part.
In the model adopted, there is a logical separation between this process and activity control
logic, which constitutes the workflow enactment service, and the application tools and end
user tasks, which constitute the processing, associated with each activity. This separation
provides the opportunity for a wide range of industry standard or user specific application
tools to be integrated within a particular workflow application. Interaction with external
resources accessible to the particular enactment service occurs via two interfaces:
 The client application interface, through which a workflow core interacts with
a work list handler, responsible for organising work on behalf of a user resource. It is
the responsibility of the work list handler to select and progress individual work items
from the work list. Activation of application tools may be under the control of the
work list handler or the end-user.
 The invoked application interface, which enables the workflow core to directly
activate a specific tool to undertake a particular activity. This would typically be a
server-based application with no user interface; where a particular activity uses a tool,
which requires end-user interaction it would normally be invoked via the work list
interface to provide more flexibility for user task scheduling.
C. How Does It Work?
Much work, even office procedures, can be processed in an assembly line, where there
each step in the process is simple and specialized. One person may enter data. The next
person may check the data. The next may retrieve the customer’s credit bureau rating. A
computer may automatically retrieve the current customer status-recent orders, accounts
receivable, etc. When all of the information has been consolidated, a specialist may evaluate
whether to extend the credit and accept the order. And so forth. Most of the steps are simple.
Training is minimized. Staffing is often flexible, because few steps require specialized skills,
authority, or licensing. However, an effort is required to move the work between steps time is
lost waiting at each step, and there are more chances that the work will be lost or misplaced.
D. About the Benefits
1. Control and Process Monitoring
One of the big advantages of an automated work management system is the control of the
process, manifest by the procedures that are implemented by the system, and the record
keeping reporting on the process.
2. Direct Cost Savings
These are the readily measured benefits. Often they involve better use of staff, or reduction
of the staff. An automated work management system can move information through the value
chain, without an employee having to understand the entire of it so that less training is
required.
3. Management Timesavings
It’s much more easy, when manager hasn’t to trainee every new employee, system makes
it itself and he can improving another skills or he can helping with the tough cases.
4. Productivity Increase
Considering a large number of workflow installations, the 30 percent productivity
improvement is usual. After quoting that figure many times, some companies were
disappointed to only get 28 percent (even though that is a great improvement, and very close
to 30 percent), so a conservative number might be 20 percent improvement, just due to the
automation.
5. Process Redesign and Reengineering
With dramatic process improvement or reengineering, a work management system may
allow new procedures that would not be possible in a manual system. With a thorough
redesign or reengineering of a bad process, 100 percent improvement—doubling the amount
of work processed—is not unusual.
II.
The Research Report About the Workflow System by Czech
Franchisers
We can formulate initial conditions for exploiting the research and formulate hypothesis
on the basis as was mentioned above.
A.
Laying Out the Main Aim of Research and Researching Questions
If we begin from defined problems, we can lay out the main aim of research as the
question: „Can we use the implemented workflow system for the support of the information
flows and communication in franchising organisation?“ This is quite wide question, which
can be divided into particular researching questions:
 Has been the workflow by Czech franchisers and in relation to franchisees
implemented yet and was it successful?
 Have firms implicated Business Process Reengineering (BPR) or Business Process
Improvement (BPI)?
 Are the present firms of franchiser procedurally directed?
 Has been work documents digitalized in relation to franchiser and franchisees as
necessary condition of workflow?
 Does implementation of workflow lead to accelerating the process and to its better
monitoring?
B.
Formulation of Hypothesis
After introducing the main aim, there were possible to formulate the hypothesis of this
descriptive causal research.
H1: Workflow systems will assure increasing of current selling volume of franchiser on
the whole, franchisees included.
H2: Franchiser oriented on its customer should be aimed on its process.
H3: Workflow applications are not implemented into franchisers´ firms.
H4: Workflow implementation will cause accelerating of business cases both by franchiser
and franchisee and their better monitoring.
C.
Research Methods
The main instrument there was quantitative research, because it was necessary to gain
dates from specific quantity of respondents, structured to be able to be further interpreted.
The ex-post facto research was applied successfully, especially its type exploration. The
task was a contact of the man, who tries to solve, with franchisers through inquiring in
written form. In case that the questionnaire was not filling in precisely, or without response,
there was additional telephone inquiring in form of structured interview. The delivered
questionnaire was used as matrix. Three firms were analysed in form of casual study for
better figuring out.
The exploring set included these12 firms:
Alois Dallmayr
FotoStar
JACQUES DESSANGE
McDonald´s
NOVÁK MASO - UZENINY
OBI
OREA Hotels
Paneria
Pax Food
Stavo Artikel
Yves Rocher
Značkové hospody Staropramen
The additional telephone inquiring assures 75% backflow. All firms registered by Czech
Franchising Association were chosen as investigated subjects. The set in Czech conditions
was statistically significant.
D.
Results of Research
The questionnaire were worked up by simple counting up answers on closed questions, the
explored set was so small that it was not suitable to continue in dividing into parts, e.g. on
height of turn-over or number of employers.
1. The BPI, BPR Methods and Workflow (WF) by Franchisers Were Implicated in
Relation to Franchisees.
8
7
6
5
Implicated BPR
4
Implicated BPI
3
Implicated WF
2
1
0
by franchisor
relation to franchisants
Fig. 3: BPI, BPR Methods and Workflow (WF) by Franchisers
The research confirmed, that BPR was implemented in 5 Czech franchisers, but BPI is
more popular, 8 from 9 did it. Just 3 franchisers managed to implement new system of
proceeding documents of workflow.
2. Is Managing by Franchiser Installed by Process Or by Functional Positions?
others
22%
process
56%
functional
positions
22%
Fig.4: Managing by Franchiser
Most of firm operates by process, because implementation of IS managed them to do it,
22% of Czech franchisers operates by line structure, 22% of firms operates by objectives.
3. Does an Implementation of Workflow Lead to Accelerating Process in Franchiser
Organization?
33%
yes, process accelerated
less then 20%
67%
yes, process accelerated
more than 20%
Fig.5: Workflow Leads to Accelerating Process
Just firms, which implemented workflow, were asked; they agree that this leads to
acceleration of firm process.
4. Does an Implementation of Workflow Lead to Acceleration of Process in Relation
Between Franchiser and Franchisees?
2
1,5
1
yes, process accelarete
less than 20%
0,5
yes, process accelerate
more than 20%
0
3 months included
more than 3 months
Fig.6: Workflow Leads to Acceleration of Process
As we can see, workflow accelerates process between franchiser and franchisees, and 3
months after the implementation, it accelerated more than 20% by ½ inquiring subjects.
5. Has Outline of Franchiser about the Order after Implementation Improved?
no
0%
yes,outline has
improved
no
yes
Fig.7: Outline of Franchiser
In this case, subjects noticed improvement in the order outline.
6. Workflow Systems Assured Increasing of Current Selling Volume.
3
2,5
2
yes, sales increased less than
5%
1,5
1
more than 5%
0,5
0
3 months included
after implementation
more than 3 months
after implementation
Fig.8: Increasing of Current Selling Volume
The subjects noticed increasing in selling volume as well as in the case above, but 3
months after the implementation, new system doesn’t show immediately.
7. Was BPR before Workflow Implementation by Franchisers?
no
33%
yes
67%
Fig.9: BPR before Workflow Implementation
There was no BRP before implementation in one case, so it is obvious, that it is
unnecessary to have BPR before workflow implementation.
8. Was There Changeover to Process Managing Organization before Workflow
Implementation?
no
0%
yes
100%
Fig.10: Changeover to Process Managing Organization
The process managing seems to be necessary for efficient support for implementation.
9. Is the Speed of Working up an Order Important for You?
the second
highest
30%
the highest
70%
Fig.11: The Speed of Working up an Order
The franchiser priority of the quick working up an order and speed of satisfying the
customer is on the first place.
10. How Many % of Used Documents in Firms Was Digitalized?
all
33%
1/3
45%
2/3
22%
Fig.12: % of Digitalized Documents in Firms
Just 33% of all firms digitalized their documents and this helped to their flow in firms
executive systems. Firms, which have digitalized all the documents, are on the same rate as
firms, which have implemented Workflow.
E. Research Conclusion
We can derive from realized research, that 1/3 of Czech franchisers has already
implemented Workflow systems. These subjects confirmed, that implementation helps to
accelerate business cases, they can easily control process and process was simplified. The
process analysis was done first of all, but not always BPR, but mostly was done. The turnover
increased. Czech franchiser have not come through BPR, they prefer BPI more. The
communication „without papers“ works by 33% of researching subjects.
The output of this chapter will be either adoption or turning down the determine
hypothesis.
H1: „ Workflow systems will assure increasing of current selling volume of franchiser on
the whole, franchisees included “, about this hypothesis we can say that it true, because the
exploration proved it, even if there were just 3 subjects and it was proved 3 months after
implementation.
H2: „Franchiser oriented on its customer should be aimed on its process“. We can confirm
on the basis of answered question about the priority of working up an order and just 56%
procedurally manage.
H3: „ Workflow applications are not implemented into franchisers´ firms “. We can assure
that at least 1/3 of firms have already implemented Workflow, this hypothesis is not valuable
with special limits.
H4: „Workflow implementation will cause accelerating of business cases both by
franchiser and franchisees and their better monitoring“. This can be confirmed by the
respondent’s answers above.
The main task of the research „Can we use the implemented workflow system for the
support of the information flows and communication in franchising organisation?” Definitely
we can say, “YES”.
III.
Case Studies
It includes 3 Czech franchising firms chosen from the Czech Association of
Franchising.
A. FotoStar
1. Introduction
FotoStar Südcolor, Ltd. was established on 1991 with the financial help of a German firm
Südcolor which has been operating in the field for over than 40 years. The predecessor of
today’s laboratory was the establishment ColorServis in Teplice, which brought up the first
mass development of colour films in the Czech Republic in 1965. The Südcolor group,
operating in Germany, Czech Republic, Slovakia and Poland, produces more than 250
millions of quality colour photos every year and the laboratory in Teplice bears almost one
fifth of the whole amount. Within the framework of Südcolor group the firm FotoStar
operates as an individual and completely independent subject with its own conception of
development and business strategy. The co-operative relationship shows mostly in the area of
technology and of exchange of know-how and also in the area of production support. These
days the firm presents the biggest large-scale processor of amateur and professional photo
works in the Czech Republic and is able to give the widest possible palette of services
including the delivery of complete photo-video-audio goods.
Apart from the high quality of production and services the company put the main stress on
maximal reliability, seriousness and long-lasting business relationships. Primary goal is to
have a healthy firm development, technical possibilities, production capacity and finances.
This way the company try to have healthier and permanent relationships with its business
partners.
The modern, newly built large-scale laboratory is equipped with the ultra modern
professional machines of the world’s best brands and disposes of experienced team of
professionals. It is possible to produce the first-class quality colour and black and white
photos. The costumers very positively value the 24-hour service of the photo work delivery in
the FotoStar collection nets. Permanent, everyday care of business partners through the
service department and the field workers belongs to the highest standards. The permanent
offer of business actions is a matter of course. The proof for the high level of services is the
prestige award CZECH MADE that the firm has severally received. Unique software and
well-organised work give the firm the possibility of quick and comfort satisfaction of
different forms of business co-operation, including taking care of the whole chains of
workrooms placed not only in the Czech Republic. The private large system of orders carryin gives the chance to reach any place in the Czech Republic. This way of contracting
partners can be ensured to receive not only their orders but also to get the everyday deliveries
of photo-video-audio goods to their workrooms for free.
2. Information and Communication Flow Analyse
There are 3 types of consumers: Gold line-franchising partners, collaborators and petite
customers.
Firm Fotostar has implemented in last several years by means of multidepartmental teams
from ranks of suppliers, franchising partners, vice collaborators and own people from
production, logistician and marketing, information system Navision Financials for
complicated production and broad matrix of production spectra. Every order has its
specificity, at photo: dimension, photo type, kind of used film, used photo material e.g. In
addition to that, firm guarantees 24 hourly delivery order's. In face of incident to
implementation performed multideparmental team procedural analysis and some of process
had to modify, using rather implement BPI than BPR, because it wasn't needed. They did not
distil Workflow modules on its own in the setting of system Financial Navision, because not
all partners have moderate equipment Software and Hardware products, but was effected
option over outlook exchange, which concurrently support modules SCM and CRM. Source
information go either in paper forms, together with enclosed photo from ranks of
collaborators, or over web portal, where customs include gold line and petite on web oriented
consumers and mature collaborators, when is secured currency digital entering of data.
Output data has to be in connection with lawful legislature in material /paper/ form, but in
order that they must copy physical flow of product, it meanwhile never mind, because
delivery terms of goods are ultra short – mentioned 24 clock around.
Gold line
/franchisees/
Collaboraters
Petite
customers
Portal
Navision
Financial
SCM
CRM
Suppliers
system
Franchiser
Fig.13: Information flow scheme of Foto Star Ltd.
B. Orea Hotels
1. Introduction
OREA Ltd was founded in 1992 and nowadays runs the Czech biggest hotel chain - OREA
HOTELS - with more than 25 hotels all over the Czech Republic in more than 10
destinations. The hotels are members of the National Federation of Hotels and Restaurants of
the Czech Republic. Owing to its unique background and possibilities OREA HOTELS is
able to offer a sustained product for all market segments in the Czech Republic. Through the
offer presented on the following pages we would like to assure you that we have the makings
to provide a great diversity of top services:
 Preparation and organization of congresses, conferences, trainings, and presentations
or of a gala evening as the case may be
 Stays for families with children, and even with a pet
 For sportsmen: skiing in the mountains, biking
In 2000, 2001, 2002 OREA Ltd. ranked among "Czech 100 Best" in the face of more than
8000 companies. Individual hotels are regularly in the forefront of the national performance
statistics. Thanks to joint marketing and effective sales system the hotel chain has 6000 beds
available getting results, which are comparable with European hotel chains.
OREA HOTELS are divided into three categories by the standard of services provided:
 OREA HOTELS Exclusive -category ****
 OREA HOTELS Classic - category ***
 OREA HOTELS Tourist - category **
On-line booking system
Links all the hotels of the chain thus enabling to make a reservation at any time of the day
in several ways:
 In person at the reception of each hotel of the chain
 Over the phone through Call centre to take the information and reservation line
 On the websites
Since 2001 OREA Ltd. has been granting franchises
 Years of experience in running hotels in Central Europe
 Experience of the successful transformation of the trade-union recreation centres into
commercial hotels
 Stable growth of the level of services
 Excellent knowledge of the situation on the Czech travel market and the awareness of
the marketing and business advantage
In firm 80% of receipts implement incident hotel net, remainder franchisees.
2. Information and Communication Flow Analyse
3 components of information system:
 Economic information system
 Intranet
 Booking system
Economic information system was implemented by firm Navision Financial 8 years ago
for needs of firm economy. Intranet, operating on web basis, is primarily identified for
sharing information. Booking system, where information are nightly synchronized, installed
for better survey about the state of free accommodating capacity. Solving over portal on web
and over affiliates travelling bureau (data station)
For communication is used an e-mail (e.g. month franchisees assessment), further firm
publish a magazine for staff and franchisees. Workflow solved over Lotus Notes, latter
variants, realized by self-help, were sabotaged by staff, because then all of them could be
controlled, what who does and who causes work restrains. Evident was a fear from
rationalized work, increasing of productivity and thereby laying off the employers.
Booking
system
Navision
Own hotels
Franchisees
Financial
system
Intranet
Franchiser
Lotus Notes
Fig.14: Information flow analyse of Orea Ltd.
Suppliers
C. McDonald’s
1. Introduction
It seems to be appropriate to analyse franchising system operating in firm McDonald’s, as
a dominant player at the field of franchising.
McDonald's has always been a franchising Company and has relied on its franchisees to
play a major role in its success. McDonald's remains committed to franchising as a
predominant way of doing business. Approximately 70% of McDonald's world-wide
restaurant businesses are owned and operated by independent businessmen and women, the
company franchisees.
McDonald's continues to be recognised as a premier franchising company around the
world. Perhaps the fact that McDonald's management listens so carefully to its franchisees
has something to do with McDonald’s is perennially named as Entrepreneur Magazine's
number one franchise. Franchising system is built on the premise that the Corporation can be
successful only if the franchisees are successful first. McDonald's Corporation believe in a
partnering relationship with the owner/ operators, suppliers and employees. Success for
McDonald's Corporation flows from the success of its business partners. The selection of
prospective candidates is based on an assessment of overall business experience and personal
qualifications. It looks for individuals with good "common business sense", a demonstrated
ability to effectively lead and develop people, and a history of previous success in business
and life endeavours. A restaurant background is not necessary. McDonald's is, by choice, an
equal opportunity franchiser, with a proven track record of franchising to all segments of
society.
McDonald's opened its first restaurant in the Czech Republic in March of 1992. At the end
of the year 2002 had 68 stores. McDonald's restaurants within the Czech Republic have
contributed to the overall growth of McDonald's in Central Europe. Share of incident receipts
to on franchising base operating restaurants is 45/55.
2. Information and Communication Flow Analyse
The chief process is distribution of goods toward customer. The supporting process are
managing of quality, preparation, safeness, recruitment of employers etc. Corporate
managing according to aims on yearly base and it is followed by evaluation of factor 5:
operating standards, people development, and satisfaction of consumer, financial stability and
support for trademark.
Firm prefer communication 1 to1 participant, used software product is e-mail, without
workflow system. An ordinary post is often used. Firm has a special economic system AS400
from IBM developed in Great Britain, it was implemented in a whole central Europe, except
for France and Germany, which they have their own. System was adopted; participants were
informed about how to control it. Central applies processing managing only on new manager
affiliates then they turn to managing by objectives. Processes were formulated by motherly
organisation and in standardised shape distributed to affiliates. Affiliates uses executive
STORM system, which alone look-out height of reserves in store, alone generates form for
supplier, which is then adjusted and approved every day by affiliate leadership, and supplier
is electronically informed about necessary supplies. Further there are registered counts of
sold products and achieved receipts, information are every day up-dated and forwarded to US
server over data ware central in Czech Republic.
Suppliers
STORM
Franchiser
Navision
Financial system
system
Data Warehouse
Own
restaurants
Fig. 15: Information Flow of McDonald’s
Franchisees
U.S. Central
IV.
Conclusion
There may be a variety of reasons to implement a work management system. Improvement
of internal processes is the traditional first purpose and its depend on the organisation,
especially how large is it and how many business process it has. This might increase without
increasing the costs. It might be to improve the quality of service. Or it might be to reduce
costs in an industry that is not growing rapidly. It is important to know what you are trying to
achieve—for example, increase work performed by existing staff, or reduce staff to do the
same amount of work. However, it is rare that reducing staff means direct lay-off, since
normal staff turnover is often comparable to the pattern of productivity improvement, as
people become expert in using the workflow system. Managing processes between
organizations (in this case between franchiser and franchisee) is another possibility of using
workflow—issuing and tracking the orders for products and services from a franchiser
company, perhaps integrated with processes within the franchisee company. Some of the new
facilities for e-commerce have been established and integrated with work management tools.
We can say that with the best person doing the most important work following the correct
procedures, not only is the business conducted more effectively, but also costs are lowered
and the service to the customers and information exchange between franchiser and
franchisees is generally better. With the work equitably distributed and the confidence that
they are always working on the “right” thing, users are happier. Therefore workflow is good
for the company, good for the customers, and good for the users.
Research in franchising firms confirms these conclusions. The main task of the research
„Can we use the implemented workflow system for the support of the information flows and
communication in franchising organisation?” was answered positively.
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