Have You Noticed that Franchises are Popping up Everywhere?

Posted by Tom Scarda, Certified Franchise Executive on Mar 28, 2018 4:41:34 PM

It’s time to say goodbye to the old franchise business model. The new 2018, advanced model, is like a smartphone compared to the old ma bell rotary phone.  Franchises industry wide are dialing in.

It’s time to say goodbye to the old franchise business model. The new 2018, advanced model is like a smartphone compared to the old ma’ bell rotary phones. Franchise companies industry wide are dialing-in. The rate of growth in franchising was exceptional last year and the projection for 2018 looks even better. Recently, at our bi-annual FranChoice conference, we discussed this change and why it’s happening now. My friend, mentor and fellow FranChoice Consultant, Rick Bisio, offered an interesting view. He pointed out that there are three chief reasons franchising is currently shifting and expanding more than any time in history: private equity, technology and ease of ownership.

It seems that private equity firms have discovered the power of the franchise model. These ‘cash/rich’ firms are investing, in some cases, tens of millions of dollars, into a single franchise concept. The influx of money into a small, emerging franchise company, enables the franchisor to invest heavily in ways, not seen before, making the concept highly sophisticated.

The power of franchising has always been in the business systems. Today, franchises have the best, cutting edge technology that money can buy. Even in newer franchises, it’s not uncommon to see state-of-the-art call centers, online management systems, automated scheduling systems, GPS vehicle-routing logistics, website optimization and consumer facing smartphone apps, just to mention a few of the exciting, progressive advancements we’ve noted recently.

A fatter bankroll allows companies to hire the best talent to run the franchises and also add lots of support personnel to on-board new franchisees. Because the franchise doesn’t have to sell franchises to pay their monthly bills they are able to be a lot more selective about who they award franchises licenses to, adding strength to the equity of the company for the long haul. 

A franchise system that is enjoying a cash injection from a private equity investment firm has significant competitive advantages over non-franchised businesses as well as poorly operated franchises that may have been passed over by investment firms. This puts the franchise in a position of influence in a market enabling it to achieve ‘household name’ status in far less time than ever before. For a savvy potential franchisee, investing with a well-positioned franchise, means an easier exit strategy and a more lucrative payout when the time comes to sell. 

Because of all the technology in these business operations, it’s easier to run many franchises remotely or on a semi-absentee basis. When a potential franchisee knows they can start a business and not have to leave their current employment, it eliminates some of the risk and associated fears that often come with making the leap into business ownership. With that, the prospect pool of great people with rich and vast corporate experience has become much larger and gives a franchisor more opportunities to award licenses and grow fast.

As we slide into Spring, I would like to wish you the very best. As you know, my franchise coaching business is 100% reputation based. Everyone I work with comes to me based on reputation and/or direct referral. If you or someone you know is ready to consider a change in direction, someone who is frustrated with their career or cringes at going to work in the morning, I would welcome a conversation. Email me today! Let’s make this year the year you take control. For more, check out my podcast Franchise Podcast.