Franchise Asia April 2017

International Focus
The Widening Communication Dilemma
The most chronic issue facing franchising in 2017 is internal
communications. Dramatic generational shifts are taking
place as millennials, those ages 20 to 35, have entered the
workforce and their mindset is significantly different than their
predecessors. According to generational researcher and author,
Jamie Notter, he suggests in his book When Millennials Take
Over, they need work environments that are “digital, clear, fluid
and fast”. Coupled with the growing diversity of franchisees (e.g.
more women, more minorities, more veterans and more foreign
owners) franchise systems must evolve their communication
strategies to create more consensus, become more inclusive and
promote more franchisee-to-franchisee engagement.
which must compete for a modest pool of prospects. While in the
past these new concepts could solicit a “franchise packager” to
turn their model into a U.S. ready system, the results of that may
not be as effective as a much more customized approach will
be needed. The proliferation of the brokers provides these new
franchise entrants with a “turn-key” solution to their franchise
development needs, by identifying interested candidates and
connecting them to a potential franchisor. While that seems
simple enough, there just may not be enough quality candidates
to go around in 2017.
Furthermore, the franchise offers couched in the cookie-cutter
model of the 90’s must now give way to innovative models
including quasi-franchises and hybrid agreements. Also, the
‘Franchise Advisory Council’ and ‘National Ad Fund Council’
approaches should be revisited with an eye towards more
franchisee engagement, more localization of the marketing and
more monitoring on their impact on elevating brand value. More
diversity in the composition of these groups is needed, along
with more feedback loops from franchisees across the network
to build consensus. As more millennials enter the franchise
sector this year than ever before, it is critical franchise leaders
prepare to embrace them as employees, franchisees and supply
partners. Failure to do so could led to catastrophic results.
Likewise, franchise offering documents and agreements should
be reviewed to ensure they are timely and well-balanced.
Yet, those that chose to go direct to the market will find it
increasingly difficult to attract prospects using traditional
approaches such as trade shows, outbound campaigns and
internal referrals. Franchise Development staff will need to put
away their “shotgun” approaches and get out the “sniper rifle”
to target prospects with the right characteristics for the concept.
And, when a franchisor identifies a high-profile target, they will
need to go after them with new fervor to ensure they choose
them over the growing number of direct and complimentary
substitutes. This year, renewed efforts should be placed on
bolstering existing franchisees that are not realizing the full
potential of their franchises to ensure systems are not losing
ground on the market. This requires a fresh look at franchise
support staff capabilities, their time spent with franchisees and
what is in their “toolkit” to help close performance gaps.
As more diverse groups enter the franchise arena they desire
transparency in all aspects of the offer, reasonableness in
the agreements and fairness in the benefits from success.
As regulatory bodies review franchise documents, they
are increasingly looking for the same recipe. All too often,
franchisors just “update” their offers annually with minimal
changes. 2017 is a year for a complete rewrite of the offer,
agreements and manuals.
Renewed Focus on Innovation
Historically, when a business reaches a plateau in their lifecycle
they either reinvent themselves or fall into decline, which if
left unchecked can lead to obsolescence as in the case of
Blockbuster and Radio Shack. Franchise systems are reticent
to embrace innovation given the rigidity of the model. Rarely do
franchisees like or embrace change, and there is really no good
Franchise Asia • 2017 Vol 33
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