Five questions for franchisors eyeing growth in 2024 - Iridium Partners
Five questions for franchisors eyeing growth in 2024
General News

Thursday, 16 November 2023

Five questions for franchisors eyeing growth in 2024

It’s that time of year when ‘next year’ is just around the corner. For franchise systems focused on growth in 2024, now’s the time to address five key areas.

How good is your franchise business model?

Start at the very beginning. Is there an ongoing and enduring demand for the goods and, or, services that your system provides?

This can be a daunting and challenging question that can rock the foundations of any business, but probably one that Video Ezy should have asked themselves in 2008.

From there, look at what the model looks like for your franchisees. What does your single unit economic performance look like? Do your franchisees make a profit? What’s their share of market versus other brands and independents? How has this changed over the past 1-2 years? What have you done to mitigate recession and the challenges over the past 1- 2 years? How do you stand out from the market?

First and foremost, if your franchisees don’t have money coming into the business and are not making a profit, they won’t survive and prosper, and no franchise system or franchisor will have long-term sustainable growth.

Is your franchisee recruitment marketing active and effective?

What are you doing NOW to attract, engage and convert interest in your brand to appointing the right franchisees?

Working backwards, do you know how long it takes from an initial enquiry to convert to a new franchisee?

If you have measured this amount of time historically, I suggest you revisit it – you’re likely to find it has stretched, perhaps even doubling. If this was three months, it’s now six, so you better have some interest now late 2023 for franchisees in 2024.

From there, what are you doing to engage and coach prospects along their franchisee journey?

With around 600 franchise systems in New Zealand, do you really think your brand is the only one they are looking at or have enquired about?

Where is your growth going to come from?

How has the market changed, grown or shifted? What are the opportunities for your goods and services or business model?

This is going to set or guide where your overall market opportunities are, where you should be looking to establish new franchises or territories, and where you should be placing your focus for franchisees.

Critically, you cannot have franchise growth without franchisees – who are your likely franchisees? Do you have an ideal franchisee persona? Do you know what your successful franchisees have in common, and how to identify them?

Finally, how do market opportunity and availability of suitably qualified, interested potential franchisees intersect?

What have you done to assist with funding challenges?

Access to capital and funding challenges are not new in franchising. What is prevalent is the continual rise in establishment costs for many systems and, increasingly, access to capital which is becoming harder and harder for potential franchisees.

As a franchisor, what have you done to reduce costs of entry? What’s your relationship like with the major banks? Do they even know your system? Do you have and share benchmarking with the banks? Have you explored or looked at reduced initial fees and, or, looked at how you can soften entry for new franchisees?

How happy is your existing franchisee base?

Unquestionably, profitable franchisees are essential to long-term growth and sustainable franchise systems. However, I suggest immediate or short-term growth relies on happy
and engaged existing franchisees. It’s essential to maintain the current system.

Existing franchisees deliver the brand on a day-to-day basis and drive revenue and everything that flows from that. But happy, not just profitable, franchisees promote the brand, stay in the brand and contribute positively to the brand over time.

What are you doing as a franchisor to engage with your franchisees, gauge their happiness and improve it? Do you conduct regular franchisee satisfaction surveys? Do you have an annual conference?

What’s the level of attendance and engagement? In the age of Zoom, how often to do you have face-to-face meetings?

Franchisors who intend to grow in 2024 need to get underway now with their market opportunity identification programs – they need to have effective and ongoing franchise recruitment marketing in place and they need to be looking internally at their system’s health and prosperity and how they can assist franchisees into the brand.