Strategies for future sustainability

Whilst the past four years have taken its toll on all businesses, the franchise sector has proved its resilience and, on the back of the survey results, FASA believes that, as we embark on a new year, now is the time for franchising to step up and find ways to plan for its future growth. Whether it’s lobbying government to partner with it in using the franchise business model to establish grassroot franchise concepts in the social, tandem or micro spaces, finding flexible franchise options tailored to our new world or targeting corporate companies to look at franchising as an expansion mechanism, franchising remains one of the strongest business formats for future sustainability.

Recognising market disruptors – both negative and positive – will determine the future of franchising. The franchise sector, in general, was quick to adapt to the disruptions caused by Covid, riots, floods and is generally more resilient and sensitive to market fluctuations, this alertness to change needs to be a top priority going forward. Technological advances must also be taken seriously and adapted and adopted if they add value to the franchise network.

Key to the future growth of franchising is the ability of the sector to develop concepts in line with the changes in consumers’ behaviour and buying habits. Whilst price and quality remain a top priority, consumers will always value the experience of their favourite brand.

Franchising becoming a viable option

Franchising offers proven models, brand recognition and a lower-risk investment. Franchisors that strengthened their business systems and supply chains during the pandemic should be highlighting those strengths, elaborating on steps taken to mitigate the risks, introduced new strategies and how franchisees were supported.

Consolidation or expansion?

It is in a franchisor’s DNA to want to continually grow his brand, increase his footprint and, more importantly, increase profits through expansion but in these turbulent times, it may not be the best move right now. More importantly, and before putting that expansion plan into action, a franchisor must consolidate his existing franchisee portfolio and attend to his current ‘family of franchisees’ – identifying who is struggling, surviving or soaring.

Capitalize on the brand’s stability

Share the steps taken to mitigate the challenges the brand suffered, how franchisees were supported and, by extension, how customers were serviced. A strong brand that conveys resilience, consideration and care will win the day.

Have a strong base of existing franchisees

Ensure that existing franchisees are well-equipped and supported to handle any future challenges. The head office needs to in place ‘intensive care’ contingency plans to assist any struggling franchisees.

Expand with flexible franchise options

Investigate offering more flexible investment options in the form of smaller footprint models whose operating costs such as overheads and labour could be somewhat contained.

Diversity

This trend, as a broader cultural consciousness is evolving through all business sectors, as lessons were learnt that having all one’s eggs in one basket was often a risk and the fact that people finally recognise that multicultural markets are largely untapped.

Consumers’ new habits

Against a backdrop of incessant load-shedding, tracking the consumers’ next moves is important. Whilst price and quality remain a top priority, consumers value the experience of their favourite brand, and this should be top of the list for every franchise business. Analyse the business model and see if there is scope to broaden offerings, making life easier for customers.

Recognize market disruptors and act accordingly

The pandemic, the riots, floods, load-shedding and general political chaos have been the most negative disruptors South Africa has ever seen. Technological innovations such as the metaverse should not be seen as a passing fad but be investigated as potential ways to expand market share.

Put a short-term plan in place

New franchisees want to know how existing franchisees are doing, and being transparent is key to being an ethical franchisor. Franchising has fared better than independent businesses and there are signs of a strong rebound. If a brand’s franchisees are growing, go ahead with expansion plans.

Put a long-term plan in place

For the long term, planning expansion goals must consider challenges such as cash flow, a struggling economy and other pitfalls. If Covid and the past four years has taught us anything, it’s to be prepared for any eventuality and always have a strong financial strategy in place.

Health and Education – the feel good factor

The pandemic has impacted schools and prompted renewed interest in forms of home-education and franchises that provide learning aids and online learning solutions.