Doing Better Business in 2010
| Franchise business
Sarah Stowe | Editor | Franchising Magazine
When franchisors were faced with a serious financial crisis in late 2008/early 2009 the best of them took a long hard look at their business structure and spending and re-assessed how they perform.
The most franchisee-focused businesses last year improved their communication strategies, not to the public but to the franchisees upon whom they depend for their profit growth.
In the US, for instance, some major franchisors have repackaged finance tools to make access easier for the franchisee, and have involved the franchisees at early stages of developing ideas; they have also stepped up their communications and ensured technology isn' t the only way franchisees keep abreast of franchisor development.
Australian franchises have been adept at fine-tuning their support, some of the businesses have cut back on expansion plans and concentrated on shoring up their franchisees, some have boosted their back-up teams so franchisees can get the help they need. Not through hand-outs or short-term economic benefits, but by redirecting the franchisees to their own financial figures.
Franchisors able to identify those most in need of business assistance have been able to address franchisee concerns with targeted help from the business development managers and additional training to upskill their franchisees, setting them up for a better year in business.
However, too many franchisors still rely on revenue information as a guide to business success. A greater understanding of the need for franchisees to make a profit, and helping to provide the tools to achieve and measure that profit, has been at the core of the best Australian franchisor strategies for 2009/10.
Of course franchisors need to recruit the right franchisees to ensure the partnership delivers the financial results both partners are looking for. Matching the demands of the individual system with the personality, skills, goals and financial liquidity of the prospective franchisee has become paramount, as banks look for more capital investment as security and franchisors search for good business sense coupled with ambition.
When the franchise partnership is right, it can ride even the tough times. Franchised business has been recognized as a more productive structure than company managed firms in the economic downturn and there' s no doubt that running your own business creates an incentive to succeed like no other.
There have been some franchise systems proclaiming an excellent year' s trading and too few franchises to cater for the customer demand, many of these in mobile systems with low outgoings.
In 2010 some sectors such as the under-developed fitness arena are showing fast growth; other industries require consumer's disposable income to expand. Even when the economy is looking more positive, backing a business which provides an essential, or perceived as essential, service has to be the best bet.
Of course everyone needs to eat, as those in the food business will always remind us, so the future of the retail food franchise sector looks strong, albeit heavily over-subscribed.
The downturn has seen the casual dining and fast food market benefit from consumers' budgetary concerns and it has continued to innovate. Just look at the activity in the pizza arena, where big name national brands have addressed the quality and choice aspects of their offer in response to a more competitive line-up with younger, high-quality focused franchises setting the pace.
But whatever the sector, whichever the franchise, conducting extensive due diligence is the best preparation for a successful business venture.