Navigating the Future of Franchising

Date: 20 May 2024

Foreword: In a rapidly evolving business landscape, staying ahead of the curve is more crucial than ever. Adaptability and innovation are key to thriving in a changing franchise landscape.

Thesis

The world of business is undergoing a seismic shift that will redefine the franchise landscape over the next decade. Things that worked just a few short years ago no longer work today, and franchise brands need to adapt quickly or risk being left behind. While this new era is going to present challenges for some, it will also offer incredible opportunities for others.

To thrive in this rapidly changing environment, franchisors need to let go of outdated thinking and embrace a more agile, forward-looking approach to business. By staying attuned to the shifting competitive landscape and evolving needs of today’s consumers, franchise brands can capitalise on these market shifts and position themselves for long-term success.

1. The rise of artificial intelligence

Artificial intelligence is no longer a futuristic concept – it’s here, and it’s transforming the way we do business. Franchisors who fail to develop an AI strategy are at risk of falling behind competitors who are able to leverage this powerful technology to their advantage, drive efficiencies, enhance the customer experience, and accelerate innovation.

2023 was the year of AI experimentation, but 2024 is the time for action. By adopting AI into your franchise system now, you will gain a competitive advantage and future-proof your brand while navigating the challenges ahead.

2. Baby boomers are retiring

As baby boomers reach retirement age, franchised businesses face a significant generational shift.

Expect to see a higher percentage of franchisees retiring this will require proactive succession planning, more franchise resales and even the need to implement buyback schemes. Franchises will need to prioritise things like knowledge transfer and retraining programs for the next generation of franchisees.

Both franchise recruitment and consumer targeting must pivot to younger generations like Millennials and Gen X & Z, whose buying preferences and expectations differ vastly from baby boomers. Franchises will need to adjust their sales materials, approaches, and strategies to align with these changing demographics.

So where to from here?

In today’s fast-paced business landscape, just reacting to change isn’t enough. True competitive advantage belongs to those who proactively anticipate and address upcoming changes effectively. Drawing from my experience with clients and running my own businesses, I have identified four key strategies for navigating this shifting landscape and achieving sustainable, accelerated growth.

Crafting an Effective Approach

#1: Develop a Winning Strategy

In my decade of experience observing and advising business leaders, I’ve noticed a critical mistake that keeps many franchisors from reaching their full potential – they lack a clear and coherent strategy. They focus solely on planning, and while having a solid plan is important, it’s not enough to ensure long-term sustainable growth and success.

To truly thrive, you need a powerful strategy. You need an overarching game plan that positions you in a way where you can dominate your market. Without it, you risk being outpaced by competitors who have a stronger strategy in place.

What’s the Difference Between a Plan and a Strategy?

A plan is a set of concrete action items, like a to-do list. This could be initiatives like improving customer retention, launching a new product, or opening a new location. It outlines the specific steps and tasks needed to achieve short-term goals and execute particular initiatives.

Plans are necessary, but they’re not a strategy.

A strategy, in contrast, is your high-level approach. It’s an integrative set of choices that uniquely position you in your given field to win. It’s the “why” and “how” behind everything you do.

Think of it this way, a plan is like a set of driving directions, while a strategy is like a GPS system that shows you the best route based on real-time traffic, road closures, and your final destination. Without that strategic GPS, you can’t adapt to changing conditions and find the optimal path to success.

A strategy is theoretical. It outlines the rationale why you will do things in a certain way what you think will be the likely outcome and how you think that outcome will provide a unique competitive advantage but you will not know for certain.

The 3 Essential Elements of a Winning Strategy

To develop a powerful strategy that drives growth, make sure it has these three qualities:

To become a market leader, you need a powerful strategy that identifies and defines your unique competitive advantages and how you’ll leverage them to achieve your long-term goals.

Consider Apple vs Kodak.

In the early 2000s, while many tech companies focused on creating a range of products, Apple’s strategy was to innovate and create a unique ecosystem with products like the iPod, iPhone, and iTunes. This coherent strategy allowed Apple to dominate the market, despite fierce competition.

On the other hand, companies like Kodak, which primarily focused on planning and short-term goals without a cohesive strategy to adapt to digital photography, failed to sustain their market position. They were outpaced by competitors who had a clear vision and strategy for the digital age.

Develop a powerful strategy, and watch your franchise thrive.

#2: Prioritise and Utilise Leverage to your Advantage

Leverage is the secret weapon of highly successful businesses, and it’s more crucial than ever in franchising. Striking the right balance of resources to support a growing franchise system is a significant challenge. Franchisors must be well-capitalised to foster growth while providing robust support to franchisees and maintaining quality and consistency across the network.

Leverage amplifies efforts, allowing businesses to achieve better results with less effort. Companies that understand and effectively utilise leverage gain a significant competitive advantage.

As a franchisor, you’re constantly seeking ways to propel your company to new heights. But simply working harder isn’t going to cut it. To achieve exponential growth, you must work smarter to multiply your efforts, scale your resources, and unlock a new level of efficiency.

4 Types of Leverage we all need to be thinking about

1. Media: Your 24/7 Growth Engine

What if you had a tireless salesperson promoting your business around the clock, attracting new customers even while you sleep? That’s the incredible power of leveraging media.

By creating a “binge bank” of strategic, high-quality content, you can transform your media presence into a nonstop growth machine. Thanks to innovations in technology and software, producing and distributing this content is more cost-effective than ever, allowing you to reap tremendous returns on your investment.

The benefits of a strong media strategy are undeniable:

The key is to be strategic. Don’t just hire a social media manager to churn out daily posts – invest in high-quality, purposeful content that solidifies your brand identity, builds trust and resonates with your target customers

2. Capital: The Strategic Multiplier

If media is the engine, capital is the fuel that propels your business forward. By strategically deploying your funds into high-impact initiatives, you can amplify the power of every dollar invested. The key is to identify the areas that will generate the greatest return on investment (ROI) and capitalise on them aggressively. The primary focus should be on two key areas: force multipliers and direct revenue drivers.

Force Multipliers

A force multiplier significantly enhances the effectiveness of your business operations, achieving greater results with the same or fewer resources. These investments exponentially increase the impact of your efforts.

Examples include:

Direct Revenue Drivers

Direct revenue drivers have an immediate and tangible impact on generating leads or closing sales, directly increasing your business’s revenue.

Examples include:

Strategically investing in these areas ensures optimal use of capital, driving substantial growth and profitability.

3. Labour: Maximising Human Resources

In today’s complex and costly staffing environment, optimising human output is always good practice. By automating routine administration tasks, implementing effective training programs, and leveraging AI and business automations systems, businesses can significantly enhance their productivity. It’s essential to maximise the value derived from labour investments.

The objective is to empower each team member to focus on high-value activities that drive the business forward. Combining the capabilities of software, AI and automation with human creativity and problem-solving can lead to unprecedented productivity levels.

A great metric to monitor is revenue per employee, aiming for a minimum average return of three times the employee’s cost.

Consider these strategies to enhance your labour output:

By implementing these strategies, businesses can optimise their human resources, driving growth and efficiency. Investing in training, systems, and technology is not just about keeping up with the competition; it’s about setting new standards for productivity and excellence.

4. Software: The Force Multiplier 

In today’s fast-paced digital landscape, visionary entrepreneurs recognise that the right software, including AI and automation, is a crucial lever for faster growth. Implementing the right software solutions can be transformative, propelling your business ahead of the competition.

Imagine streamlining operations, accelerating onboarding, and automating sales – all while freeing your staff to focus on high-impact initiatives that drive growth. Recent surveys reveal that sales teams spend only 22% of their day on actual selling activities, with the remaining 78% consumed by research, planning, note-taking, and reporting. However, 99% of these time-consuming tasks can now be automated with cutting-edge software and AI!

Investing in software is essential for forward-thinking franchise leaders. Here’s why:

The integration of the right software, including AI and automation, is not just a luxury but a necessity for visionary entrepreneurs aiming for accelerated growth. The transformative power of these technologies can propel your business ahead of the competition by streamlining operations, accelerating onboarding, and automating sales processes. This, in turn, allows your staff to focus on high-impact initiatives that truly drive growth.

Putting It All Together

As a business owner, your ability to outpace your competition depends on your ability to strategically use leverage to your advantage. By optimising these four key areas, you can build an unstoppable growth engine that outpaces the competition.

Leverage really is the ultimate secret weapon for visionary entrepreneurs and the key to building a lasting competitive advantage.

#3: Heavy Focus on Demand Generation

All business is downstream from lead generation, every other problem in your business can be solved by throwing more resources at it but if you can’t generate enough demand for your product or service, you don’t have a business.

In recent years, I’ve witnessed many legacy businesses get disrupted by forward-thinking founders who have capitalised on modern lead generation strategies. These savvy entrepreneurs understand that the ability to consistently attract the right leads at scale is a huge competitive advantage. It dictates how successful you can become, what prices you can charge, and which clients you choose to work with.

The ultimate goal? Becoming “oversubscribed” – having more demand than you can even handle. This not only validates your market position, but allows you to boost prices and be selective with clientele.

To thrive in today’s competitive environment, businesses must adopt and master modern lead generation techniques.

Effective Lead Generation Methods

Crucially, these strategies maintain a consistent brand message across all channels. This creates a seamless experience that builds trust and drives prospects to take action. 

Businesses that excel in lead generation not only attract a steady stream of potential customers but also position themselves as leaders in their industry.

To ensure a consistent flow of leads, companies must adopt a multifaceted approach. Integrating personal branding, digital advertising, an omni-channel strategy, and additional techniques like content marketing and social proof is essential. By doing so, they can drive growth and sustain their competitive edge in the market.

#4: Scalable Mechanism for Qualifying, Nurturing, and Closing Leads

For franchises aiming for rapid expansion, a scalable mechanism for qualifying, nurturing, and closing leads is essential. A well-defined sales process that is repeatable, measurable, and continually optimised allows you to capitalise on increased lead generation and drive consistent growth at scale.

What is a Sales Process?

A sales process is a series of steps your team follows to convert potential leads into paying franchisees or customers. An effective sales process has three critical characteristics:

Peter Drucker the O.G. of management theory said two of my favourite quotes that directly apply to having a formal and measurable sales process:

 “you can’t manage what you can’t measure” & “If you can’t measure it you can’t improve it”.

Scalability is also particularly important, as it enables you to maintain high standards, continuously refine your approach, and ramp up lead generation efforts without creating bottlenecks that stifle growth. 

In short, a streamlined systemised sales process is a must-have for any franchise looking to scale faster than the status quo.

Wrapping Up

The future of franchising belongs to those who can strategically leverage these pillars to their advantage. By developing a robust strategy, utilising leverage effectively, focusing on demand generation, and implementing a scalable sales process, franchisors can navigate the challenges ahead and achieve accelerated growth. Embrace these principles to build an enduring competitive advantage and elevate your business to new heights. The key to success lies in proactive adaptation and a commitment to continuous improvement in this dynamic landscape.

If you lack the in-house capabilities to execute these strategies, consider a strategic partnership with someone who understands the franchising world. Look for partners who provide valuable insights and tailored strategic initiatives. The right partners will be invested in your long-term success, keeping you informed, accountable, and on track to achieve your goals. With their guidance, you can navigate the complexities of franchising with confidence and clarity.

By combining your expertise with the knowledge and resources of trusted partners, you will be well-equipped to thrive in today’s dynamic business environment.

Daniel Marr
Founder Franchise Funnels