3 minute read
it's not easy BEING GREAT
Franchize Consultants offers timely advice for franchisors and franchisees
The recent Franchising Confidence Index survey by Franchize Consultants (see page 16) paints a vivid picture. While there are many positives, the outlook for many business growth drivers remains challenging. Elevated inflation, high interest rates, softening demand and profit compression are all causing uncertainty.
Consequently, many franchisors have concerns about access to finance, franchisees and staff, and worry about established franchisee operating costs and profitability trends. Key trends seen as impactful in the longer term include the regulatory environment, changing customer expectations, AI, changing demographics and diversity.
Great franchising in a tough environment requires clarity. Here are some lessons for prospective and established franchisors and franchisees.
Franchising a business
Successful franchising needs a rock-solid, successful business model capable of delivering good returns in tough times – enough to support a solid franchisee Return On Investment (ROI) and, once established, a solid franchisor ROI. A comprehensive feasibility study is the first step in establishing an optimal franchising structure for a business. Once committed, decisions need to be systemised and documented in the franchise agreement, franchise manuals, and development tools – to mention just a few.
Established franchisors
Established franchisors will benefit from a tailored focus during these challenging times. In particular, there’s a heightened need for long-term franchise system planning coupled with short-term management execution. Franchisors should take any opportunity to review and improve their business model, including carefully researching and planning required changes for implementation.
It is crucial that franchisors work closely and cooperatively with franchisees – not only to optimise individual performance, but to explore potential improvements and changes to the whole system.
Buying a franchise
If you are about to buy a franchise, it is essential that you learn about what franchising involves. Do the Franchise Association’s free online training for prospective franchisees and explore the advice on Franchising and You at https://franchise.co.nz/advice-centre/6.
We also suggest that you research franchises from more than one sector. This will enable you to compare business models and franchise structures, and recognise the differences. You’ll make a better decision, and may find a type of business you’d not thought of previously.
Established franchisees
Take time to develop – and operate to – a comprehensive business plan. Incorporate your goals and aspirations, along with insights from your franchisor team, professional advisors and other high-performing franchisees. Take time to build clarity around your objectives and action plans, covering the key functions and success factors for your business.
Final thoughts
Franchising can be very rewarding for franchisors and franchisees alike. In challenging times, it is important to have strong foundations, clear strategy and focus.
Six-times Service Provider of the Year, Franchize Consultants has been advising medium and multinational businesses for 35 years. Contact us to see how we can help you.
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Franchize Consultants
Contact Dr Callum Floyd
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