POSITIVE ACTIONS BREED POSITIVE RESULTS
2 February 2009 - How franchisors and franchisees fare in 2009 depends not just on the economy but on their own attitudes and actions
I was recently chatting to a franchisor about how long-running franchises had coped with previous recessions in 1991 and 1998. ‘Actually, 1991-92 was when we started franchising,' he mused. ‘It was a great time.' He then said he was expecting 2009 to be a good year too as the number of potential franchisees on the market increased - then he drove off in his newly-acquired Ferrari. It was nice to talk to someone starting the new year with such a confident and positive approach - and, as the Franchise Research Institure report has shown, optimism is catching.
Yet why shouldn't he be positive? When I looked at the list I had compiled of franchisors who had ridden out tough times, one thing was clear - they were all companies that had gone on to great success and, in many cases, to dominate their markets. Names like Fastway, Paramount Services and Baker's Delight. They were well-structured, well-led, knew what it took to survive and were prepared to invest to ensure that when the good times returned they would come out on top.
The same will apply in 2009. The economic forecasts might generally be gloomy but Domino's Pizza in the UK has revised its profit forecasts upwards and RFG, the Australian company behind the Donut King, Michel's Patisserie, Brumby's Bakeries and bb's café brands reports that sales growth in the final two months of last year outstripped growth in the four previous months. That doesn't surprise me - after the Crash of 1987, when I was working in the fast food business in the UK, our turnover went up in many stores while ‘proper' restaurants suffered. People didn't stop eating out, they just ‘traded down' on the eating-out experience.
Of course, it's still early days. Nonetheless, I'm certain of one thing. McDonalds, Pizza Hut and KFC may be three of the largest employers and trainers in the world, but we won't be reading about them going to the US government for a motor industry-style bail-out. Good franchises have a habit of not just surviving in hard times, but emerging stronger than ever from the other side.
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