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Where Is Franchising Headed?
Part One of Two
by Jerry Wilkerson

If someone claims to know what will happen in the business of franchising through 2009, don’t believe him or her. It is going to be that kind of a year. A multiple of answers and voices are more fitting, and a great deal has to do with which industry faces disappointment and which flows through successfully.

However, do not calculate out the prosperous possibilities that franchising transports to national and global competition for financial success. Be advised, this is not a chronicle about good and bad franchisors.

Franchising firms will traverse some very defiant marketplaces, while stretching cash flow, paying excessive costs for quality lead generation, and begging for credit to operate while helping franchisees buy into the system. Credit remains a foremost stumbling block in 2009.

Most industries under the big tent of franchising suffer from the credit crash, others will not. Retail real estate is cold, with malls across the country foreclosing in 2009, shuttering franchise-leased space with little notice. We will see hotels, shopping hub big box stores, and strip centers go dark, as commercial mortgages fail and lenders walk away, stung by huge financial losses and devaluation of property.

Chains now look exhaustingly to their leadership to rewire the business plans for survival. Outside franchise consultants, retail experts and business industry specialists will be in demand to solve the retail vagueness and economic puzzle. Job losses will race to nearly double-digit scores as the nation and the world head through a prolonged recession. This recession has already produced penny-conscious buyers putting a needs test to everything they purchase. Overall spending will be down in ’09. Perceived mid-level shopping, where retail is king, has the products the shopper is content to buy. Now, find that sweet spot and start selling.

Branded chains will provide reward points to stabilize customers while insuring repeat buyers. Spending habits change by the day with fewer stores available to buyers, who stake out their territory for shopping and drive only in that area. The coveted age group of 20 to 40 now understands the financial insecurity and risks that come with frivolous buying. Careful spending changes retail’s approach to this market, and many of the industries within franchising.

Paring of store inventories will produce faster product turnaround sales while catching new wave products, all helping to move through the season quickly. This will aid in bringing shoppers back. It is not your mother or father’s kind of marketing. This is niche servicing. Mom and pop will gain plenty of attention from franchisors in the care industries, including home and health, entertainment, education and physical fitness.


WAY OF LIFE

Franchising has never been a good bet for quick-change leadership. Franchisors must know their franchisees, their family members, personal financial position, even health, and embrace this entire package. It is a way of life, not a road to financial welfare for the founder or investor management.

Franchising is still in command with a staggering 41 to 43 percent of our nation’s total retail sales and service dollars pouring through the system, according the International Franchise Association figures. It’s an employment engine on fire, and it produces wealth right through economic hard times. You don’t need an MBA to succeed. One and all are in it together to win. Franchising is the profitable wonder machine that plows through challenges and persistently produces success.

The modern method of franchising is a powerhouse for investors too. They clamor to buy branded systems, rework them, build up the value, and sell them to another investment team. Franchising is a colossal international movement of broad-based business segments.

In franchising, we let others do the pioneering, and then, with franchisees, we do it bigger, more quickly, and efficiently in large numbers. The founder took the time, economic risk, built the business model, while showing the franchisee how to do it, upgrading the system along the way and pave the route with training.


Franchising firms will face defiant marketplaces, while stretching cash flow.

A dynamic relation between the franchisor and franchisee exists to promote the growth of the chain. This allows for solid communications, superior customer experience, and street-driven sales knowledge flowing in both directions. Each party shares in the commitment and vision as they march lockstep to establish values, foster brand development, create corporate culture, set marketing directions, and cultivate bottom-line-enhancing worth.

Franchising invites everyone to join. In franchising, the success of both the franchisee and the franchisor is truly dependent upon the success of each other. That symbiotic relationship thrives on the willingness to prepare for success. Through constant and consistent training of the franchisee, franchisors strive to improve and to increase the system’s value, and thus the value of the individual units. But each entity must be willing to invest in the other.

Successful franchisees are captivated by the business while investing in their future. They should be infatuated with the force that goes into the thriving development expansion and basic commerce of the brand they buy into for growth. They will possess good work habits, business ethics, people skills, and a burning in the belly to win.


REMOVE RISK

Franchisors must eliminate the franchisee’s reason for failure. To remove risk, franchisors are obliged to consistently test, refine, and add to their products and services that augment the brand value for both parties.

For the last year in this decade, what will make franchising successful in this strapped economy are the franchisors’ tested methods of doing business and their unending search for good franchisees to grow the system with new units. Franchising itself is bountiful enough for the non-pioneer and the pioneer to walk next to each other equally.

Without a quality workforce and unwavering management, the franchising system of business could not provide the excellent price points, branded quality, consistent training, and elevated efficiency of service for which it’s celebrated worldwide. Success in franchising implies optimism, mutual competence, and fair play.

Franchisors have to hold a high opinion of the worth of their company, what they sell, and feel that the product or service they provide is the best their employees can produce for their business. Franchising makes the world a much better place in which to live and work, and acknowledges everyone’s success throughout a branded system.

Franchisors comprise faith in their organization and their staffs, that they have a profound desire to help others succeed. Clear, defined vision and consciousness allow them to generate the fusion of people working together with franchisees.

In this global economy, franchisees pay less attention to what franchisors say and more attention to what they do. This brings even more focus on the franchise system workforce. A dynamic franchisor hires quality people whom he or she encourages and enable to become the finest employees they can be. Those destined for success never underestimate the ability of their workforce to exceed their expectations as they labor toward a better tomorrow.


The modern method of franchising is a powerhouse for investors too.

Franchisors planning to succeed in an economy filled with valleys, hills, mountains, rivers, tight credit and techno-driven business plans must:

  • Be risk takers to discover the new opportunities.
  • Make the ordinary the extraordinary and look ever forward into a Technicolor marketplace that is constantly changing.
  • Assemble a management team that shares passion with an unyielding workforce. Time should not be boundaries.
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