Article:

What are some current trends coming through the Franchise sector?

01 September 2017

We're seeing the introduction of a lot more mobile franchises and home-based services, particularly in coffee and food.

Franchise Sector Trends

From a market perspective, mobile franchises are less investment than a traditional food court or fast food business. So, it appeals to a wider demographic. For example, it's easier to have a pop-up store in an industrial area, where they can then go to festivals, major sporting events, school fetes and the like - they don't have to be in one location but can follow the crowd. One of the biggest challenges with a bricks and mortar franchise is that trends change, and mobile services can respond to them better.

The second trend is the evolution of things in certain areas of professional services. For example dentistry, veterinary and legal services have started to franchise quite successfully with the power of brand. I did some work last year with a veterinary group, and found that there's a trend away from people opening independent veterinary clinics. Instead people are moving into franchised veterinary. One reason for this is that a lot of new vets are women who want the partnering network of a franchise environment.

You think of things like dentistry and veterinary, they're generally professions that have never advertised, and for someone to come along that has a ready made marketing solution, which franchising provides, is an attractive option.

Another trend is around health, fitness and wellbeing. We've seen an explosion in 24-hour fitness centres to the point where the market has become overcrowded. The next evolution of that is now personalised classes. People are willing to pay a premium for a personalised service. In the personal care we've seen a phenomenal growth in beauty and cosmetics services as well.

The other trend is in food. This is still emerging but we're slowly seeing an evolution away from traditional food court models and a move back to fast or convenient dining. People are willing to pay a premium for a dining experience rather than just the meal. We've had a total shift from fast food where quality was sacrificed, and now we've moved back to quality where people are willing to pay that premium. Things like UberEATS and Deliveroo are providing those sit down and home delivery options, which have allowed them to broaden their customer base.

Linked to this, one of the emerging trends now is looking at how your franchisor is supporting franchisees through use of technology. How is your business evolving to make use of technology to either provide a better service to your customers or reduce the cost of operating your business? An example of this could be an app that allows you to order food online before you pick it up. Another example is the drop in cash being taken due to new technology. A couple of weeks ago I had my first ever franchise group come in and say they're going cashless in the food sector.

What changes are coming to the Australian franchise framework – what are the key dates?

Single touch payroll from 20 plus staff to whole economy.

How can you get your franchise house in order?

From a franchisee perspective, the first thing you need to understand is how your store is performing on a regular and real time basis. This includes how you're performing against other franchisees in the network but also against normal benchmarks. For example, are you able to pay yourself a salary, are you getting a return on your investment? Over the course of the franchise are you going to get your capital back? If the answer to those things is no then you really need to be sitting down with your franchisor and really work together to improve the performance of the store to your and the franchise's benefit.

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