Economic instability and its effect on the franchising industry

Here are some of the key shifts that the franchising industry has undergone:

1. From burgeoning economy to long-term recession
   Times are tough and we are seeing this clearly in the changing needs of consumers who have been affected by the recession. No one is immune to the ever-present challenges of inflation, higher prices and the increased cost of living, so consumers are shopping smarter and making choices that are more informed. They are savvy purchasers and are researching options and doing their homework before putting their money on the table.

2. From brand loyalty to a proliferation of brand choices
   Consumers now have more information, more power and are more verbal thanks to social media platforms, and they are not shy to voice their opinions, positive or negative. Their influence is unprecedented, and it is growing exponentially. Add to this the numbers of international brands which have entered the market: Burger King, Zara, Dune, Top Shop, Karen Millen, and a number of potential entrants (H&M and Hamleys to name just two), so consumers have more choice than ever before.

3. From customer service to customer experience
   The biggest shift that we have seen in retail is the swing to experience, in many cases is what matters most to the consumer. People are looking for purpose in economically stressed times and will frequent brands which add value to their lifestyle.

4. From specialists to the multi-skilled few
   A key trend that we are seeing in Europe is having staff that is cross skilled, easily moving from one discipline to another, reducing the need from many specialists to multi-skilled and multi-tasking few.

5. From managed expense control to diminishing products
   The combination of high rentals and escalating electricity increases are just two factors influencing ever-increasing operating costs and franchisees are seeing the realisation of operating profits more difficult to achieve. This is forcing them to think creatively about how to optimally manage expenses and control costs at store level. The goal posts do not stop moving. The targets are ever changing. As such, the franchisor's role is to offer support via innovative methods designed to save money, improve efficiencies and streamline processes to drive top-line sales to counteract the negative impact on profitability.

6. Now you see me ... now you don't
   Franchisees are not as present today in their businesses as they used to be, or should be. During my time at Wimpy, I was impressed to see how many Wimpy restaurants were run by family-owned franchisees for two or three generations, with owners raising their kids in the restaurants. Couples ran the restaurants successfully, spending most of their time with their staff and interacting with customers. Some would even have their baby's camp cot in their office and others even went to the extent of creating a dedicated baby room at the back of their restaurants.

7. From waiting for business to planning for it to happen
   The paradigm of waiting for customers to stream into a business is over. The proliferation of brand choices means that consumers are spoiled for choice, so franchisees need to have an action plan. It needs to be formulated and documented because, if a plan is written down, one inevitably achieves between 70-80% of the objectives. Do not write it down and the chances are you will achieve between 40-50% of what you set out to do.