Our Hardware as a Service Business Model for Franchises
River Capital Finance is a leading provider of Hardware as a Service (HaaS) for end-users, resellers, vendors, and manufacturers. While we’ve been working closely with these groups for more than 30 years, our services aren’t limited to them alone. We are also proud to provide hardware support for franchises — both franchisors and franchisees — to ensure they have the hardware, software, and support they need to remain productive.
Often, hardware providers are either unable or unwilling to be flexible enough to work with franchises. This is because of the relationship dynamic between franchisor and franchisee. For example, many providers who work with franchises will only provide hardware financing at the franchisor level — requiring the parent company or corporation to hold the agreement and then resell or lease the hardware to their franchisees. Unfortunately, this adds more complexity and administrative burden for franchisors and franchisees.
It’s because of this that River Capital provides an alternative solution that creates a winning arrangement for all parties. Thanks to our flexibility, we allow franchisors to share their corporate discount and benefits with all of their franchisees, helping them take advantage of corporate-level cost savings while getting the hardware they need, but without requiring the franchisor to hold the contract for all franchisees. Furthermore, we customize each franchisee’s agreement to its respective needs. So if one franchisee has less significant hardware needs versus another, they wouldn’t be required to take a similar arrangement.
Two Examples of Hardware Support for Franchises
1. Major Fast Food Chain
A great example of our hardware support for franchises was with a major nationwide fast food chain. With more than 200 corporate stores and more than 300 franchises, this chain needed a solution for franchisee hardware that gave them their corporate benefits but didn’t place the contract responsibility with the parent company. Corporate stores’ hardware contracts still remain with the corporate account, but each franchisee has its owner’s credit reviewed and arranges the deal with the owner as the credit holder.
Thanks to our hardware support for franchises, this fast food chain was able to get its corporate and franchise stores the same great deals on their enterprise hardware while freeing the corporate store from owning a larger master contract or owning all of the individual franchisee hardware agreements.
2. FedEx
Another example of our hardware support for franchises but on a larger scale is FedEx. With more than 3,000 franchises nationwide, the scope of such a hardware initiative was vast. Each franchisee owns its delivery routes, its trucks, and other equipment but historically has relied on the corporate entity for hardware support. And because the hardware needs of each franchisee varies, it was a costly, administrative, and risk-heavy arrangement. River Capital stepped in to support FedEx with the hardware transition.
Prior to working with our company, FedEx purchased the equipment that franchisees needed and charged them a monthly fee for using it. This included handheld scanners, cradle mounts for trucks, and more. Now using River Capital for franchise hardware support, the FedEx corporate office still specifies the hardware options available for its franchisees, but the process for obtaining the hardware has changed.
Just like our first example, FedEx franchisees can utilize corporate benefits and discounts, but each franchise owner must first undergo a credit check and, once approved, is responsible for the contract. When they’re ready to get their hardware, each franchisee visits a specific site that showcases the options corporate has selected. The franchisee places an order, a credit check is conducted, the agreement is finalized, the hardware reseller receives the order and payment, and the hardware is sent to the franchisee. At this point, River Capital begins charging the FedEx franchisee a monthly payment.
Why HaaS for Franchises Makes Sense
Whereas companies might otherwise have to take on the initial hardware investment for their franchisees and either bill them monthly or charge them full-price, HaaS allows corporate entities to provide the right options without a significant upfront investment or a hefty investment on the part of their franchisees. All parties save money immediately yet are able to take advantage of the benefits of that hardware, which ultimately allows them to realize a higher return on investment sooner.
The risk factor is reduced for the franchisor as well, as it no longer has to assume a large financial burden that it would have to continue carrying if the franchisee was unable to meet its obligations. And because the program is more affordable for franchisees, the steep costs and risks that come with franchising a business are reduced, allowing the franchisee to focus on growing their business and using their capital more strategically.
Last but certainly not least is productivity. Hardware refreshes are critical to maintaining certain levels of performance. Depending on the device and how it’s used, devices simply may not last or perform well after a few or several years. Eventually, the repair, updates, and other adjustments that are needed for aging hardware will begin to impact productivity. This can quickly outweigh any benefits the device provides. With HaaS, hardware refresh cycles are typically set for every three years, ensuring that older devices are pulled from the field and replaced with newer models. This saves companies from downtime, repairs, and other costs associated with older hardware.
If your company has been looking for a solution for its franchisees, or if you’re a franchisee and feel that others might benefit from more frequent hardware refresh cycles and lower total cost of ownership, contact our team today to get started.