FOne certain thing about franchising in 2017 will be change. Indeed, successful franchises must change to meet the current market conditions. Online is helping many businesses grow but can also be the downfall of others. Social Media now also gives consumers a greater voice than they’ve ever had before and whilst that can be great at finding new customers, provide bad service or service that is not up to their standards and these customers quickly can become your worst nightmares and even destroy a business’s reputation. So, businesses need to remain agile and keep changing to suit an ever-changing market and keep growing and evolving as a business because without growth then the business is a stalled venture or one that is possibly in decline or losing market share to its competitors that have a better product or brand that is taking away your customers and you may be slowly dying or becoming obsolete or you’ll be just the next Video hire business that time has made obsolete.
What are the hot franchising trends and how do you successfully anticipate future trends?
Predicting and anticipating trends in franchising is not easy. Sometimes it seems that successful franchises just appear overnight while others mature over time. In fact, there are a wide range of factors – some predictable, some not so predictable, that help determine which franchise will make it big, while others flop.
One of the factors that are frequently relied upon to predict a trend in franchising is the use of demographics. Demographics analyze what is happening in various segments of the population. By studying the demographics of the local market, you can gain a general sense of buying trends that will affect the demand for certain types of products and services – changes in our economy such as increased unemployment or higher interest rates will also influence the success or failure of businesses as these changes may impact consumers’ need or buying habits.
So how do you find the franchise that is right for you in a changing market? To do this we need to understand what is happening in the franchise world, and where it’s all headed. As per usual the forecast includes growth, and that’s exciting. But today’s environment also provides many challenges.
Yesterday’s successful product/service offering and marketing campaign won’t necessarily work today, as many leading franchise systems have found in the retail slump that began after the Global Financial Crisis (GFC).
With franchising, change is needed for growth. Franchising is based on methodologies and processes, businesses need to move forward into the future. A thriving franchise grows throughout all its years of operation. Different delivery methods come on scene and new technology makes an appearance. In addition, the consumer changes over time and businesses need to be aware of market trends and to keep ahead of what customers will be wanting next.
Customer preferences and demands do not stay the same. For example, restaurateurs in the 1970s might not have served many customers requesting vegan menus or expecting a variety of international flavors. Franchises must continue adapting to the marketplace. Before choosing a franchise in 2017, potential franchisees should ask franchisors a few vital questions
Choosing a franchise – 5 questions to ask franchisors
- What time is devoted in this franchise to developing systems and markets?
Franchisees want to know how much time a franchise allows for research and development purposes. Ask the franchisor for examples of what they have done in the past to change their model to suit the market or changes in their industry, and ask if the business is future proof?
- Does the franchisor plan any innovations?
Before people invest in a franchise, they should know if the business is willing to change with the times. Obviously by the nature of franchising, certain elements stay the same in the system. Yet business ventures must keep up-to-date with the mood and direction of the marketplace.
As well, franchisees should be prepared for the degree of change. Does this franchisor hardly ever make changes or do they modify processes, colours, or flavours on a regular basis? No franchisee can be prepared, however, for everything that lies ahead in a franchise.
Even franchisors have no control over external factors such as the economy or changing governments and different regulations. Yet franchisees should arm themselves with as much information as possible before they buy a franchise. Franchisees must perform ‘due diligence’ (researching the franchise from every angle).
- Does the franchise allow franchisees opportunities for creativity?
One basic fact about franchising is that each franchise has systems and processes and franchisees are expected to follow them. Of course, franchisors can allow franchisees to express their individuality. Since buyers will be working within the framework of a franchise, they should be aware about the requirements of a specific business.
Is this franchisor very rigid in their approach? Will the franchisor welcome a franchisee’s creative spirit? Potential buyers need to know the score. The franchise must suit you.
- Does the franchise have good analytical systems?
The franchise should have a system capable of analyzing the customers and current marketplace – even franchisees. A franchise cannot be effective if its leadership and management are not in touch with the entire business. A trained and friendly staff, as well as customer satisfaction, also plays a huge part in the success of any venture.
- What is the company’s vision?
A franchisee should ask the franchisor about their vision for the company. Franchisees will learn plenty about the business from the answer to that question. Potential buyers can get a better idea about whether this franchise is right for them. Keep in mind during 2017 and beyond that there is one ‘constant’ you can always expect in franchising – constant change.
Finally, how do you buy a business that is future proof?
To me the definition of a future proof business is a business that continues to thrive, grow, and make money in any economic condition. But first we need to look at the differences between needs and wants. Needs are things that we as consumers need to maintain our lifestyles and the daily activities, in other words ‘NECESSITIES’. Things like food, clothing, a roof to live under etc. Wants are things we want to have, but are not necessary to maintain our lifestyles or daily activities. Things like an 80″ LCD TV, fancy car, Luxury Speed boat, diamond rings etc. you get the point. When the economy is good and people are making money, we tend to spend on our wants, however when the economy is bad, we tend to cut down or even eliminate wants, however our NEEDS never go away.
Future proof franchises are businesses that traditionally offer products and service that consumer and business owners just can’t (or wont) live without. The demand for these types of non-discretionary products and services is consistent because they are considered necessary to run a household or successful business even during a major economic downturn.
Still, despite the downturned economy in the larger scheme of things, franchises have proven to be very resilient in the face of economic adversity and are more likely to succeed than non-franchised businesses. This is mostly due to the essential nature of franchise business. One of the hardest things for a non-franchised business owner to do is adapt the business plan to account for the shifting economy while successfully operating the business. Franchisees don’t have to worry about that, because as they continue to perform daily operations, the franchisors and their team takes responsibility for adapting business plans to the changing market, and with the long history most franchise operations have, those adaptations are made with a wealth of knowledge and experience behind them that most non-franchised businesses simply do not have.
Another huge benefit that a franchise opportunity brings to the table that no ordinary small business can compete with is a comprehensive marketing plan and marketing dollars that can be adapted for the best strategies for local and national advertising, these marketing funds constantly grow from franchisee and franchisor contributions and having availability to marketing dollars constantly allows for franchised businesses to adapt their market strategies to suit changing markets. Many small business owners of non-franchised businesses don’t have the same disciplines to put a percentage of their weekly turnover back into the business for marketing activities. The problem with this is when there is a downturn in the business they usually don’t have the resources to adapt and change their marketing position.
Because marketing is something that the average self-starting entrepreneur is not well versed in but is one of the most important tools for maintaining a business through any market condition, having that professional staff of marketers doing the work on your behalf is a huge plus for any business owner.
Kevin Bugeja, Managing Director, Franchise 4 U
Ph: 0412 511 630,
email kevin@franchise4u.com.au
