As I scan all of the news reports, and anything to do with franchising throughout the United States, I see some Industrial Development Essay trends which are starting to emerge. I am noticing franchise attorneys talk about it, and I am observing franchise associations start to figure out how to best educate their members to take advantage of these future trends. Indeed, I am also watching the regulators carefully scrutinize several new game changing events. These are things that are happening right now, and they appear to not be short-term trends, but rather long-term changes in the industry.
Indeed, as a former franchisor, and also a franchising consultant, I would like to address four of these points, from my point of view. In other words, where I see all of this going from the perspective of a franchising company projecting out into the marketplace with hundreds or thousands of franchisees, and as a futurist type thinker, then you decide if you think my assessment is valid. Now then, here are the four points I’d like to address;
1. Social Networking
2. Smartphone Secondary Industry Payments
3. New Health Insurance Rules
4. Challenges with Funding, Expansion
Back in the year 2000, social networks didn’t exist, and neither did blogs. There were no text messages, and the smart phones back then would be considered dumb phones right now. However, I do recall challenges on Internet forums, as franchisees would give away proprietary information accidentally, or when disgruntled customers of one franchisee would get online, and trash a brand name hurting all of the franchisees in the entire system.
That was the beginning of some of the challenges. Today, one mistake from a franchisee can go viral on the Internet, YouTube, or throughout the social networks in hours, not days, weeks, or months. Therefore many franchisors feel the need to have social networking crisis teams. Even back in the day, I can remember working to put out fires online, nothing like it is today, as we just got around to it whenever we felt like it, or whenever we thought it was getting out of hand.
Social networking is now used by franchisees to get customers into their local locations, and also by franchisors to strengthen their brand name, find new franchisees to recruit, and even to offer discounts and coupons to all their franchised outlets. This trend will definitely continue, along with GPS smartphone based coupons, alerting customers that are near locations that there are special discounts right around the corner if they are interested.
And speaking of smartphones, and location based coupons, and alerts for those on customer reward programs with specific apps; those same customers will be able to pay with their smartphones. Many large companies are already doing this, and this trend will continue, and you can bet every retail franchise outlet or service company will offer apps in the very near future.
Next, there are some economic and political issues which are affecting franchising. For instance ObamaCare, and the phase-ins coming forth in 2014 requiring all employers to provide health care insurance for all their employees. This is an increase in cost which will be a burden for all franchisees who own franchised outlets. It will cause a decrease in new hiring, and also a reduction in labor force. It’s also a huge cost, which will hurt the profitability of not only every franchised outlet, but every small business in America.
There may be some changes in that law, but we don’t know that yet, and it is causing a little bit of a problem in the industry as franchisors are scrambling for solutions, and even trying to get the Obama Administration to give them waivers. Some large franchising companies have already gotten waivers, and others have not. Those companies that cannot get waivers will be put at a competitive disadvantage. Many franchisors that could not get waivers are already starting to cry; crony capitalism.
Another issue that has to do with the overall economic situation in franchising are the future challenges with the availability of funding for new franchise outlets, expansion of current franchises, and issues for franchisees who have signed development agreements with their franchisors. Now then, if interest rates go up, there may be more banks willing to lend money because it is now worth their risk, but that money will also cost more for the business borrower. There are some banks lending money to small businesses, including franchisees now, but things are not where they need to be. This is an unfortunate trend which looks like it will continue. Meanwhile it will affect the growth rates of franchising companies and slow their franchises from expanding or opening new outlets.
Okay so, that was my discussion for today, on some of the trends that I see coming forth. Yes, there are several others, but these are definite trends which are happening right now, and show no signs of letting up. Therefore, I hope you will please consider all this and think on it. Now then, I hope you come up with the strategies you need to make sure that your franchising system or franchised outlet succeeds and thrives in the future regardless of what additional new trends come forth.
As always, if you have any comments, concerns, questions, case studies, solutions, or new innovations regarding any of the items I’ve discussed please shoot me an e-mail. I am open to talk to individual franchisees, franchisors, vendors to the industry, media, or franchising companies and future franchisors.
