My 5 biggest predictions for franchising in 2017 18
I’m tired of trends.
Every year I’ve written an article called ‘Top 10 Trends for 20XX’ [insert year]. But the thing about trends is that they wouldn’t be trends if they weren’t taking place over a relatively long period of time, which means that they’ve been pretty much the same for the last few years.
But these are challenging times for franchising — according to the news media, at least — and no doubt you’ll be wanting to know what changes may take place that will affect your franchise. So I’ve looked into my crystal ball and had the following visions of the future…
Prediction #1: There will be fewer Government initiatives which appear to discriminate against franchising
The right of franchise systems to be seen as collective small businesses rather than single big businesses has been tested over recent years. In the United States, McDonald’s fought the National Labor Relations Board’s ruling that it was a “joint employer” along with its franchisees and the International Franchise Association did battle against moves to raise the minimum wage. In New Zealand, FANZ protested that Part 6A of the Employment Relations Amendment Act was unfair to franchise systems by lumping them together with corporations. They won. Now in the United States, it's no surprise that under the Trump administration, the Obama-era guidelines for the Department of Labor have been thrown out. And the move to raise the minimum wage from $7.25 to $15 per hour seems to have stalled — although it’s fair to say that in states and cities which have elected to raise the rate, for example in Seattle where it’s now $15, there seems to have been little detrimental impact on franchises.
Protests, however, continue and the NLRB is still going after McDonald’s in court. My view is that, like all businesses, franchises — especially those which rely on low wages to compete — will need to innovate and adapt to the changing business environment.
Prediction #2: Franchising will get disruptive again
Back in the fifties and sixties, franchising was a disruptive business model, threatening the existence of independent mom-and-pop stores and restaurants. Now it’s franchising’s turn to be disrupted — by the likes of equity-funded chains such as Starbucks and Chipotle, a more regulated labour market, and the on-demand economy.
But do you think franchising will take all this lying down? No, sir! Franchising is no slouch when it comes to adapting new business models and technology into its own business model. McDonald’s has started the ball rolling with its new self-ordering panels. If I owned a commercial cleaning franchise, I’d be thinking hard about robotics right now. If I owned a taxi or courier franchise, I’d be looking at how on-demand technology like Uber’s could streamline my operation and reduce my costs. And if I owned a fast-food or retail franchise, I’d be exploring better ways of getting my products to my customers, instead of them coming to me — including on-demand delivery services such as Postmates and drone delivery.
Prediction #3: Franchising will morph into more hybrid models
As part of getting disruptive again, franchising will morph with other business models to create hybrids that meet the needs of customers and bring the cost of doing business down in unexpected ways. I am currently working with two clients who are developing on-demand services which they feel will be best managed at a local level by franchisees. Crowdfunding is now being used to finance both franchisors’ and franchisees’ businesses. SaaS, the Cloud and mobile technology are taking the cost out of computing and communications, and bringing franchise networks closer together. And as franchising changes shape, people will stop asking the stupid question ‘Is it franchising or not?’ and start discovering more and better franchise-related models.
Once, lawyers, accountants, consultants and other professional services providers turned their noses up at the notion of franchising in their profession, but now a few have grasped the benefits and the rest have realised that their business model is no longer working for them. Independent builders were once the norm, building around 70% of the new homes in New Zealand, but now the same percentage of new homes is being built by building franchises. Renovation and handyman franchises are causing a similar shift in their segments of the building industry. Expect to see more franchises go where no franchise has gone before — and that includes new business types that don’t even exist yet.
Prediction #5: Franchising will continue to grow
As finance becomes more available, more minorities and women become interested, new opportunities arise and the internationalisation of franchises continues, the continued growth of franchising is inevitable.
“We are forecasting that for the sixth consecutive year, franchise businesses will grow at rates that exceed the economy-wide growth of industries where franchises are concentrated,” said the International Franchise Association’s new President and CEO, Robert Cresanti. “Franchise businesses are showing tremendous capability to provide new jobs for working families and new businesses for first-time business owners across all sectors in local communities, despite the fact that franchisees are facing many new regulatory threats at all levels of government.”
The IFA is predicting that franchise businesses in the United States will account for a 3.1 percent growth in jobs, adding 278,000 direct jobs to the economy this year for a total of 9.1 million. Franchise confidence in New Zealand has bounced back up from a dip two years ago.
Want to expand your business, perhaps by franchising it? Or looking to develop or improve your existing franchise? Take advantage of my free Initial Consultation to discuss ways I can help you.
I'm Robin La Pere, no ordinary business expansion and franchise consultant. I've been involved in franchising for more than 20 years, and I am one of the few franchise consultants I know who have a combination of franchise management, franchise ownership and franchise consulting experience. I understand the industry at every level and across a wide range of business types. I have worked with many franchise systems to improve, develop and innovate.
As a franchise consultant, I keep a close eye on news in the franchise industry, and in this article, I've made some predictions on where franchising may be heading in today's fast-changing business environment.
If you're looking to keep up with the latest developments in your franchise, or simply move into the future with greater confidence, I recommend you download my free e-book,
The Business Model Canvas for Franchisors, and take advantage
of my free Initial Consultation to discuss some of the ways I can help you.
Download your free e-book
You have an existing business which has
grown and become profitable, but you want more. How do you expand, especially if you don't have much time or money?
Send me your email and I'll email you my e-book 3 Ways to Expand Your Business Using Other People's Time and Money (OPTM):
Download 3 Ways to Expand my Business Using OPTM
Relevant Articles
Download your free e-book
A major strength of franchising is that it’s based on tried and true business models. Trouble is, in this fast-changing business environment, what’s tried and true one year may be tired or irrelevant the next.
Not surprisingly, one out of three franchisors is concerned about the viability of their business model.
The 'Business Model Canvas' has emerged as a powerful tool for developing and updating business models. Recognising that franchise businesses differ in several ways from other business types, I have come up with a new version of the Business Model Canvas designed specifically for franchises.
Send me your email and I'll email you my e-book The Business Model Canvas for Franchisors: