In the last decade of growth around the world a few companies failed and many prospered but 2009 was an exception. At the verge of the second great depression, many companies failed. Around the world franchising is also nor spared in fact the RECESSION as brought in sense of urgency in the franchisers. Companies with dwindling royalty have resorted to SIN, selling franchisee to bring in the revenue in the form of franchise fee.This according to the industry experts is a very short term benefit which can lead to the collapse of the company as a whole as the brand would take a beating to the blue.
Many companies experienced hard times with lead generation for franchise sales, difficulties with franchisee relations, tougher supplier negotiations, and negative consumer sales. Franchise companies were hit from all sides, in 2009.
So what do they have in store in 2010?
The franchisees in 2009 have suffered and many closed down by early 2010 and some on the verge of closure.
A top Franchise company said "We no longer have the luxury to sell franchises or support franchisees as we have in the past. 2009 proved above all that the old ways do not work anymore".
The top three thoughts i think will change franchising in 2010:
1.New franchisees will enter the market through transfers of ownership.
The legacy and older franchisees with no generation behind them will split up their units (if they have a high multiple) and sell to newer franchisees. Traditionally, the focus has been “the new franchise sale”. This is always a good strategy. However, the resale is basically ignored by most of the companies. Companies close down the franchisee or take over the franchisee and sell it after that. In many companies, the team handling transfers of ownership is not part of the franchise sales team and not trained extensively to handle these types of transactions. In order to sign the best franchisees, franchise companies must be not only ready for this, but proactive about it. The franchise companies will concentrate more on the resale in 2010 to consolidate there stand in the market after the recession.
2. A higher level of education will be demanded (and needed for future success).
It will not just be about what support the franchise offers now. Indian franchise companies have been focusing on the support and not on educating the franchisee.The franchisees that stay in the system are going to push companies to revamp their training and support. The new franchisees want this as well. Both types of franchisees are more technology savvy than ever before, and will be more abreast of the latest developments and how to e-communicate to other franchisees. They will demand more business training. The franchisees want to be more equipped to milk the market after the recession. Franchisees suffered losses in the last year and want to make it up or they have other go but to come out of the business.
3. The marketing jobs will be back—in a new way.
It has always been a chicken and egg story regarding Marketing by the franchisees. on top of it during recession when the revenue dropped drastically there was a huge curb on the marketing expense which accounts to more than 20% of the expense incurred by a franchise company or franchisee. Companies in 2010 will need to focus on increased marketing activities and new areas of marketing. More experience (and I mean real experience) in social media will be needed to grow in this year.
Actually, 2010 is shaping up to be a great year. We may truly be back to the focus being about operations , and not just selling franchises. Franchise companies should focus on present franchisees now as if they are able to sustain and grow in this year after recession they will be loyal to the company and help you grow as a company.
