Optimism is catching

Proof of the importance of a positive approach to franchising in 2009 comes from Greg Nathan's Franchise Relationships Institute, which  has been gathering data on real performance and optimism in the franchise sector. A sample of 50 franchisors asked about sales performance within their businesses reported that, as at November, 55% were trading ... read the rest of this article better than last year and a further 10% were at the same level. Results were particularly strong in the home services sector, with mobile services, food, health and beauty and, perhaps surprisingly, retail franchises also performing well. Less surprisingly, real estate and financial services were significantly down on last year.

The research also measured optimism levels. It found that franchisors were ‘very' optimistic about the future, although their franchisees were only ‘moderately' optimistic. This is as you would expect - experienced franchisors who have lived through down-turns before know that they offer all sorts of opportunities, and many are positively looking forward to the redundancies that will increase the pool of potential franchisees available and allow them to expand or upgrade their systems. Franchisees, however, are often less experienced and are understandably more nervous about what is to come. That's why they require strong leadership and evidence that the franchisor not only cares about them but is taking measures to address their anxieties. The FRI reports that franchise networks which are up in sales are focusing more on going back to basics while those experiencing a downturn in sales are focusing more on improving systems and new product development. The most-reported activities include ‘focusing on communication and positive news' and ‘investing in additional marketing and advertising initiatives.' This will be old news to the experienced franchisors mentioned above. Franchising demands constant tuning of the model, now more than ever. Those who don't respond and don't react rapidly to market forces and competition will suffer.

In many ways, though, this is a good time to make necessary changes. Money might be tight, but anxious franchisees may be more prepared to consider new initiatives than during times when all is apparently going well - as long as they have confidence in the franchisor. It's worth noting the report's conclusion that greater levels of franchisee optimism were associated with greater levels of franchisor optimism.

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