7 franchising trends to watch

In a recent conversation with two franchisor CEOs, Greg Nathan discussed several trends he thinks are worth keeping an eye on. We share them below with some strategies to consider.

As you’ll see, these include economic pressures, how information is exchanged, technological acceleration, generational change, and cultural drift.

Trend #1: Unit-level profitability pressures continue. Profitability remains at the forefront of franchisees' minds, particularly amid wage and cost-of-goods pressures, and they expect their franchisors to be focusing on this.

Considerations: Stay close to operational profit, and relentlessly track and discuss the KPIs that drive this at every opportunity. If you’re not benchmarking this, get moving.

Also, identify what high performers are doing differently, and use cluster meetings for peer-to-peer learning and panel discussions to share insights. Remember, franchisees are often most receptive to learning from each other.

Trend #2. Field manager capability is advancing. While AI is emerging as a powerful tool to help field managers analyse franchisee performance data more efficiently, this must be complemented by effective coaching.

Considerations: Field managers can use AI to identify trends, synthesise insights, and have more informed and productive conversations with franchisees.

Also, start coaching franchisees on how to use AI to analyse their own metrics, interpret trends, and identify opportunities. But remember, AI should be used to enhance human judgement and coaching conversations, not replace them.

Trend #3. Automation is replacing the human touch. While technology is improving efficiency, it is also replacing human connections that impact the customer experience.

Considerations: While automation and the use of kiosks, QR codes, robots and online ordering systems will increase productivity, you need to protect the human touchpoints that customers enjoy and value.

Some customers will prefer the speed and independence of kiosks, while others value the personal interaction of speaking with a human. Where possible, provide options.

Trend #4. Leadership transition and cultural drift. As franchisor leaders and managers move between brands at an increased rate, they are creating cultural uncertainty.

Considerations: The culture of a network is shaped by both its past and who is currently in charge. While new leaders can bring fresh perspectives, it is essential that they also take time to understand a network’s history, values, and what matters to franchisees and staff.

Healthy cultures are built over many years but can be quickly shattered when existing leaders suddenly depart, or new leaders unintentionally signal that longstanding values no longer matter.

Trend #5. The power of informal conversations. While options for gaining best practice franchising information are growing exponentially, the most useful insights will come from informal face-to-face conversations.

Considerations: What we see, read and hear is increasingly unreliable. Public forums such as social media, conference presentations, and newsletters (except this one!) often distort or oversimplify what works, and avoid more complex or sensitive issues.

There’s nothing like a private coffee catch-up to find out the truth of what is really happening in someone’s business. Informal conversations will remain one of our most effective professional development tools.

Trend #6. Understanding the next generation. While younger generations are increasingly shaping the workforce and customer base, older leadership teams have limited insight into their perspectives.

Considerations: Use youth advisory groups and panels to provide candid input about what motivates younger employees, what they value in a workplace, and what they expect as customers.

Their insights can help franchisees and franchisors to become better employers and design better customer experiences that meet the needs of this growing demographic.

Trend #7. Preparing for franchisee succession. A record number of baby boomer franchisees are approaching retirement and wanting to sell their businesses.

Considerations: Include panels featuring business brokers and franchisees who have successfully transitioned out of their businesses as options in conference agendas.

Also, succession does not have to be an abrupt exit from the business. Many transitioning owners are open to remaining involved as mentors, advisors, or part-time contributors while a younger owner gradually takes over.

A final thought

While franchising will continue to evolve, the fundamentals remain the same.

Franchise networks thrive when franchisees are profitable, leaders are culturally grounded, meetings are interactive, technology is used wisely, and people collaborate.

If you’re interested in tapping into Greg’s unique insights on the psychology of franchising to enhance your franchisee or franchisor events, please get in touch.