Like most industries, the franchising industry is evolving and changing over the years.
Several new trends have made their appearance and some of these have a bearing on investors and their franchise operations. The top franchises in 2011 are in the fast food restaurants, hotels and service industries with health care, senior services, child care, pets, fitness and financial planning as close contenders.
In this scenario, there are three important trends that have surfaced, according to the International Franchise Association. These are
- An increasing number of women and minorities in the franchising industry
- Internalization of franchising
- Growing use of technology
These trends are likely to impact franchising in a positively significant manner, making it a vibrant and forceful sector to reckon with. There are roughly four hundred franchise systems at the international level which are transforming domestic brands into renowned and recognized names worldwide. This means franchisees must look beyond the domestic market.
The franchisors’ response to new trends
Franchisors, in response to these trends, are looking overseas for franchisees and sweetening their offers and deals to attract them. Some franchisors begin by offering a single unit type deal that is later increased to multiple units and eventually a master franchise opportunity that carries even more benefits.
With the increasing involvement of women and minorities in franchising, the industry is making it easier for new entrants who might otherwise find it hard to start a business due to the lack of funds and experience. The participation of women and minority groups is being encouraged by bodies such as the IFA’s Women’s Franchise Committee and others by offering them training and opportunities to network.
Another noticeable trend is the creative use of technology among franchisors and franchisees. They use the Internet to share information, opinions, reports and also leverage it to market their business. Digital marketing is big business these days and is effectively being used to target the business’ markets. New and existing franchises are increasing their media profiles with blogs, websites, email newsletters, podcasts and other strategic methods to promote themselves online. Franchisors are exploring the importance of integrating a social media policy in their franchise agreement so that they can retain control of their brand.
What to look for in a Franchisor
Franchisees understand that their success depends on the franchisor and the support they offer. If franchisors do not give them what they expect, no matter how much money or effort franchisees puts in, they cannot experience the success they seek. Some of the factors that help a franchisee choose a franchisor are:
- The franchisor’s history and track record, number of years in business and experience in the industry
- The franchisor’s leadership abilities, an idea of existing relationship with current franchisee network and any issues that exist between franchisor and franchisee
- Whether the franchisor has a mission and vision for the next five or ten years in relation to the franchisee network.
- The franchisor must be ready to listen to his franchisee network.
- The quality of the product and services, marketing support provided with training, resources
- The number of existing franchise locations, owned and franchised.
Like any other business venture, franchising also requires due diligence checks by the franchisor as well as franchisee since the wrong decision can result in expensive consequences for both parties.
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