Franchising Must Innovate to Stay Relevant

Franchising Must Innovate to Stay Relevant

Disruption, innovation and staying relevant to changing political and economic trends and more importantly to changing customer needs is crucial to the continued growth of franchising in South Africa” says FASA Chairman, Tony Da Fonseca. “Given the current political climate, economic downgrades and general uncertainty in the country, businesses need to toughen up and be even more street smart to spot opportunities, market harder and negotiate harder to stay in business and thrive.”

“Innovation is nothing new to franchising,” said Da Fonseca.  “It’s what franchising is built on and if there is one sector that can turn disruption into opportunities it’s the franchising sector.  Being innovative and staying abreast of high-tech developments is crucial and even though franchising is based on tried and tested systems, it must be flexible enough to act quickly to embrace new technology, introduce new trends or adapt to new consumer tastes.”

It’s a known fact that when the world economy undergoes changes – either positive or negative – franchising is standing by to pick up on new trends or gaps in the market and presto – you have a new franchise concept.  The buzz word in global franchising is ‘flexibility and adaptability.’  Whether a result of a need to inject some life into stagnant franchise brands or as a result of the new world order brought about by the recession, franchising is embracing alternative and options in a big way – either by coming up with innovative areas to franchise or simply by allowing their franchisees more flexibility when it comes to adapting their existing brands to operate in ‘non-traditional’ ways to help with their bottom line.

Some of the trends in franchising that are coming to the fore include:

  • Smaller, more cost-effective franchise models with reduced franchise fees, lower start-up costs, fewer employees and reasonable rents.
  • Looking at new, less expensive alternate locations beyond the shopping malls and strip malls to expand into such as stand-alone kiosks, corporate catering, campuses, sporting events, etc.
  • Investigate alternate markets for franchising expansion.  Whether it’s incorporating a brand within a convenience store or service station or expanding an education franchise by linking in with school programmes, has already been tackled by local franchisors and is proving to be very successful.
  • Operating in tandem with other non-competing brands is another way to expand the brand into new alternate markets using the support of other brands and untapped markets.
  • Looking at business sectors where there is an appetite for franchising.  This could be in the health sector, where home care has seen enormous growth internationally to the education and child-care sector, the second hand market or the home improvement field.
  • Niche markets are offering one-of-a-kind franchises that give one the opportunity to get in on the ground floor of a new franchise trend.  Whether it’s in offering a unique ‘gourmet’ food experience or whether it’s in the ‘green’ space of energy saving technology or the more environmental space of recycling, these are the new frontiers in franchising.
  • Staying ahead of the game when it comes to identifying changes in customer behaviour, tuning in to social media trends and making sure that your franchise uses the latest in digital developments is crucial to long-term survival.

According to Vera Valasis, FASA’s Executive Director, “the franchising sector continues to make a healthy contribution to the South African economy contributing 13,3% to the country’s – a fact often overlooked by both the public and private sector. Benchmarking where South Africa stands on the world stage puts South Africa 36th in a list of 181 countries – between Singapore, Malaysia, Ireland and Pakistan in 34th, 35th, 37th and 38th place respectively – a position we can be justly proud of.”

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