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Top Franchising Trends in 2021

It’s no secret that the pandemic has taken a toll on franchising, as demonstrated by operators who were applying for PPP loans alongside small business owners at the height of unemployment and government restrictions. However, despite how harrowing the public health crisis has been on industries of every stripe, opportunities abound in franchising. Whether you’re still adjusting to the new landscape or looking to expand your network, these are top trends to keep on your radar.

Brands with a Stance Will Thrive

Purpose-driven marketing, also often referred to as values marketing, will become even more crucial for establishments wanting to differentiate themselves. We’ve discussed before how local community involvement is essential for franchisees to nurture brand affinity, but purpose-driven marketing refers to going to the heart of your brand’s existence.

Put yourself in the mindset of new franchisees, Digitally-enabled Millennials and Gen Z are the generations of passionate entrepreneurs holding brands accountable, so you won’t have much luck enticing the future workforce without a strong mission statement—and making those commitments visible. Any operator can offer the possibility of growing wealth, but not every brand contributes to the quality of life in someone’s community.

Your brand narrative also translates to consumers who have seen some of their favorite businesses go under throughout the pandemic. Of course staying up to date on technological trends, such as enabling mobile ordering and app loyalty programs, is important for staying afloat in a digitally-run economy. But when most brands can communicate and serve customers in real-time and via multiple channels, being tech-savvy is no longer a differentiator.

It’s the emotional connection nurtured over the long-term with your customers that will make them support you when they could easily do business with a competitor. If you don’t have a story interwoven with the values of your target audiences, then you will not stand out.

Commitment to Omnichannel Strategies

What started as a necessity has developed (and would have developed eventually) into a segment of customers who simply find the lack of face-to-face interaction more convenient for their busy schedules. From restaurants reducing their dine-in footprint to automotive marketers transforming their websites into virtual dealerships, the benefits of remote environments (lower overhead for the business and more convenience for the customer) will not fade from memory.

That is not to imply that traditional formats like trade shows or in-person conferences are irrelevant, but virtual and blended formats are now a staple of commerce. Since it generally requires several touchpoints to generate a conversion, brands need to use all the tools in their digital arsenal to keep them engaged and qualify them prior to in-person interactions. In the end, it’s cohesive messaging across all channels that truly keeps a brand top-of-mind.

Multi-Unit Expansion

While no one can ignore the millions of jobs lost in the franchise sector alone as a result of the pandemic, the large operators who have weathered the storm are poised for growth. Technological capability and agility have had no small influence on some brands staying afloat, franchises simply have the upper hand when it comes to capital support. The inherent stability and risk mitigation of the franchise model makes investors see franchising as a prime way to replenish and exceed revenue targets despite economic uncertainty. Since franchises are driven toward scalability, investors envision a compounding effect as brands expand their territory.

The dampened real estate costs from so many shuttered businesses also makes it easier for the remaining multi-unit operators to expand. This means that while new entrants will benefit from lower startup costs, the real beneficiaries are the far-reaching franchises ready to solidify their footprint. Thus, established brands that have maintained a stronghold in their markets will find it easier to lay claim to the old, cost-effective infrastructure of their competitors.

Greater Alignment Between Franchisors and Franchisees

Franchising has long been a relationship-oriented culture focused on internal promotion and strong industry connections. Thus, the partnership between franchisors and franchisees should create long-term value for both sides rather than tension. For franchisors, the royalties paid from franchisees can lead to millions in lifetime value, so it doesn’t make sense to not nurture franchisee growth. On the other end, franchisees who are equipped for success in day-to-day operations increase their business acumen and gain the foundational knowledge to bring innovative product and service ideas to the industry.

This shared understanding between franchisor and franchisee also means that there should not be a one-size fits all solution in supporting franchisees. For example, if potential franchises are experienced, their needs will be different than that of new entrants. While the new franchisee might lean more heavily on the franchisor to acclimate to the business, those accustomed to growing multi-unit operations don’t need to learn the ropes—they need help on bigger picture issues like product innovation, expansion, understanding market preferences, and effective ways to recoup losses.

Maintaining a cohesive partnership requires taking a hard look at Franchise Advisory Councils (FACs), as well. If a brand has a history of franchisees not feeling empowered in the decision-making process, then those complaints, which can spread like wildfire in the digital age, can stop potential recruits from ever reaching out. To make their brand more attractive, organizations need to demonstrate a collaborative operating style.

Operators will Prioritize Talent Retention

The conversation around retention in franchising is not new, but the pandemic has magnified the pressure to incentivize top talent to stay. For operators building or rebuilding their management teams, those initial hires will be an investment that creates the trajectory for business success. The baseline of this initiative is committing to fair pay. While capitalizing on high unemployment rates is a short-term solution, operators that don’t provide a future for talent will continue to battle incessant turnover and damaged brand reputation. After all, a happy crew is—and has always been—the keystone of stellar customer service.

Franchisors can take retention solutions a step further by truly championing a people-first mentality. It’s been widely acknowledged that the pandemic has taken a toll on people’s mental health. Financial and operational pressures have made team morale take a nosedive, which has inevitably harmed productivity and performance.

Operators can acknowledge their team’s challenges in the day-to-day by instilling psychological safety from general managers to entry-level crew members. If operators want to ensure an engaged team, and therefore business success, then they must invest in activities like professional development and team-building exercises that help people feel secure and committed to their role.

A Bumpy but Bright Future Ahead

As the world continues to respond to the recovering but still volatile economy, doors continue to open for franchises. Leaning into the passion points and preferences of target audiences will bring in qualified leads to run stores and loyal customers to come through them. The better your brand steers with the trajectory of the industry, the more growth you can expect in 2021.

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