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Read how Franchize Consultants can offer advice to help franchisors plan ahead in 2021.
The annual Franchising Confidence Index revealed that while there was improvement in sentiment among New Zealand franchisors and service providers across a number of areas, they also expected challenges in the areas of franchisee operating costs and access to finance. Covid-19 and changing Alert Levels have further heightened uncertainty for many.
Many franchise systems have weathered the Covid-19 storm – along with many other changing factors – extremely well over the last 12 months,’ says Dr Callum Floyd of Franchize Consultants, which runs the annual survey. But the responses highlight the importance of a number of franchise system management practices for the 2021 year. Some will need a much closer focus to ensure franchise networks, and franchisee businesses, continue to be positioned well for the long term.
He offers five key management practices for the year ahead:
- Close monitoring of franchisor and franchisee performance from both a profitability and sustainability perspective. This will identify and prioritise key performance or situational improvement opportunities and needs. A focus on franchisee performance will be particularly important to optimise existing businesses.
- Strategic and contingency plans need to be developed for ongoing Covid-related issues such as further lockdowns and closed borders, along with changes and innovations required from other moving factors. These include customer needs and behaviour, technology, workforce trends and key economic variables including interest rates, inflation, economic growth, unemployment, property values and legislative changes.
- Franchise structure and management must adapt to a changing environment, including: potential changes to franchisee and franchisor roles; resource requirements and processes; communication structures; manuals and training systems; franchise agreements; information structures; and so on. In particular franchise agreement and franchisee manual changes are very important, as well as opportunities to ensure many franchise support practices (eg. field management and business planning) are formalised.
- Increased franchisee engagement, including a focus on understanding and supporting group and individual franchisee circumstances, needs, plans and objectives. Franchisees can often be facing unique local situations and challenges during this time.
- Given the last year and the ongoing uncertainty, there needs to be focus on total franchise system team wellbeing, including franchise support office leadership and staff, franchisees, franchisee staff and suppliers – not to mention the franchisors themselves, who may have come under considerable pressure to have all the answers.
Franchising advice and help available
Many New Zealand franchisors have been incredible in their response to Covid-19, providing great support to franchisees, and adapting their business models at both a franchisor and franchisee level, says Callum.
Despite all the challenge of running the existing business, though, franchisors also need to be forward-thinking and provide direction, planning, innovation, support and encouragement for long-term mutual franchisee and franchisor success.
This is an area where good external input can help identify issues, opportunities and necessary actions to protect the investment of all stakeholders. Contact Franchize Consultants to find out how we can help.
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