Franchising adapting to the new normal
Globally, we have been living in unprecedented times these past six months with a future that looks shaky and uncertain at best. Never has any business experienced having to put a complete stop to their activities, and then to have to turn an entire franchise system back on. Franchising, by virtue of its unique business format, was able, in many cases, to modify its business models to stay afloat, draw on their combined talent and resources and regroup to look to the future. Some of the critical lessons gleaned from franchises globally include:
Adaptability the name of the game
Traditionally, the franchise industry has successfully weathered difficult economic times with adaptability a primary aspect of its DNA. When a crisis occurs, the franchisor is already looking at how it can adapt so its franchisees can keep moving forward. That is the beauty of ‘the collective’ made up of franchisors and franchisees who, in times of crisis, come together to tackle the challenges, find solutions and forge a new path. A good example are those sectors which turned to on-line trade and home-deliveries to keep their businesses going until they were able to resume full services whilst others accelerated plans for new products and services to fill customer needs.
No one-size-fits-all solution
There is no one-size-fits-all solution to re-opening franchise systems, post Covid-19. With franchises in around 14 different business categories in South Africa, the challenges facing franchisors varies – impacted by the regulations, its sector, the size of the franchise group, its maturity, business culture and most importantly its leadership. Those franchisors who got involved in finding solutions – whether in easing the royalty responsibilities to negotiating with landlords and suppliers – will be the ones to emerge stronger. A franchise brand’s track record and reputation will no doubt stand them in good stead as they navigate getting back on their feet again.
Sorting the wheat from the chaff
This pandemic will prove to be the test that separates the men from the boys. Those franchisors that set up solid, ethical operations with good systems in place and had a strong culture of franchisor/franchisee relations will be able to claw their way back to profitability. Those that chose not to abide by franchising’s stringent business practices as prescribed globally and by the Franchise Association of South Africa and ran dubious operations could see the demise of their franchise brands. There is no question that, compared to independent, stand-alone businesses hard hit by the lockdown, franchised businesses, by virtue of the very nature of the franchise format of partnership, with strong support systems in place, fared far better.
Embracing new ways
Entrepreneur Alan Knott-Craig, in an article in Biz-News, believes the world is not dying. The world is resetting. It’s hard to believe that in 2019 the talk was all about the 4th Industrial Revolution, AI and Robotics… now the resetting from the old to the new has been given a seismic shove by the pandemic. In one fell swoop we went from analogue to digital; from flying planes to Zoom; from brick classrooms to Google classrooms; from grocery store visits to home delivery; from shopping centres to Amazon; from rush hour traffic to tele-commuting; from print newspapers to social media; from cash payments to Zapper & SnapScan. According to Alan, with a front row seat to a seismic shift from an old to a new world, it’s an exciting time to be alive!
Re-writing the rule book
With franchising so reliant on hard and fast franchise agreements and stringent operation manuals, the pandemic certainly threw a curve-ball in terms of how to deal with system closures and the restarting and re-shaping of a franchise system. Whilst restructuring will have to happen, with some risk, good business judgement and most importantly good communication will make for a stronger and more resilient franchise industry. Now, more than ever the role of the Franchise Association is crucial in bringing together franchise brands under one roof to analyse the impact of the pandemic, band together to lobby government to assist in re-building the economy and re-establishing the sector as an important contributor to the country’s GDP.
Both FASA’s current chairperson, Akhona Qengqe of KFC and immediate past chairman, Tony da Fonseca of the OBC Group, in an interview on Classic Business, agreed that it is in times of crisis that the franchise model is tested and those with a strong, resilient structure and healthy franchisor/franchisee partnerships would survive and go on to prosper and become even stronger.
To protect, lobby, promote and develop ethical franchising across all sectors in South Africa with specific focus on transformation.
