In 2001, franchise business development will see an expansion of
approximately one percent growth over last year, bringing the total
to 13 percent in the first year of the 21st Century. For the past
decade, Franchise Recruiters Ltd. has exclusively conducted the
Annual Franchise Business Development Survey.
This is the only survey of its kind in franchising and is the distinct
benchmark for projecting total unit growth. It represents system
expansion opinions and executive outlook estimates for development
from the top 100 producing franchisors. These corporations form
the major franchise industries generating annual increases in component
structure across the United States and globally.
We learned that the new world economy is producing a commercial
evolution where, "The human enterprise must not be ignored.
Franchising is in an epoch of E-business, and that E does not necessarily
represent electronics or technology. The E embodies employees!"
We were advised, "Without employees a business is only a box
filled with intellectual assets."
Individual care and attention must be given to existing franchisees.
In an approach that has not been demonstrated so watchfully in previous
surveys, franchisors emphasized that, "If we care about people
and are personally concerned with the value of their lives, we must
demonstrate that concern. People will do things they would never
do for merely money alone." This insight was a universal fiber
of interpretation from many franchise executives. "Capture
the hearts of franchisees and employees, and you clarify the dignity
of the business mission."
The use of technology within the franchise system in purchasing
as well as in gathering and disseminating data to and from units
continues to cycle high in the minds of franchise leadership. Information
is power. "Investment in upgrading tech systems is with us
for life," said one respondent. "We are creating a true
learning environment for technological information. We must innovate
Cash solid franchisors continue their prowl for mergers and take
over targets, especially within industries that lend themselves
to existing management oversight and development. Smaller systems
and regional chains will find it increasingly difficult to secure
financing. We were told that franchisors must control their real
estate, build operating profits, continue to diversify, and provide
more equity for loans.
Developing "life skills" is another objective that remains
a constant with franchise managers. Franchisors train more people
per year than does the entire U.S. government, including all branches
of the military. Technology has seized center stage in education
and instruction; however, "technology should not be at the
expense of the human being." An inspiring assessment was provided
in the study. "Learning is a partnership with everyone in the
store, and everyone is a teacher and a student through lifes
journey. Technology is simply a tool."
Franchisors declare they are willing to change attitudes and ways
of doing business to make the workplace supportive to nontraditional
workers. Savvy franchise systems provide language classes to teach
English and Spanish and pay their workers for their efforts. Training
manuals printed in various languages enhance productivity, build
employee retention, and promote the workforce. Personnel can grow
with the company as communications skills improve.
"Diversity is a business issue, not an HR topic," according
to our surveyed decision-makers. "For diversity to succeed,
the franchisors overall strategy and goals must be supported
from the top down."
The U.S. has 38 million people between the ages of 15 and 24, the
traditional age for hiring new workers into franchise organizations.
Minority populations are increasing. Hispanic is up 35 percent;
Asian-Pacific is up 40 percent; and African American is up 12 percent.
In the next four years, the Department of Labor predicts that Hispanics
will surpass African Americans as the nations largest minority
group, and 85 percent of people entering the workforce will be women
Workplace sensitivity issues are high on the minds of franchise
management. Potentially litigious circumstances have become a product
of our times. All chains are exposed to impending legal disasters.
The following observation was noted in the survey: "No problem
in this area of our business is small. They are painful, costly,
and socially draining to any system." Franchisors are learning
to create respectful work environments. "We must put in place
a solid, caring corporate culture with consistent training and education
along with clearly written rules, regulations, and easy to understand
policies and procedures."
Keeping management teams in place, a problem exacerbated by the
Internet, is a defined objective for franchise organizations. Some
chains admit stores have not been built because management was too
thinly stretched. "We have markets with zero unemployment that
cannot support expansion even when the markets beg for consumer
attention." More problems of this nature are predicted.
In this spandex tight labor pool, senior franchise managers are
concerned with costly employee turnover. Recent surveys show that
store operators themselves cause much of the worker unrest. The
emotional and financial cost of chronic turnover is a huge drain
on unit and system profits. Many times managers do not realize the
root cause or what the costs are to rehire replacements. Some even
believe turnover is inevitable. Moreover, the loss of managers is
devastating to franchisees and franchisors alike. "Managers
are valuable commodities," we were told. "They must become
a part of the partnership. Otherwise, consistency and quality of
the chain diminish, standards fall, and the business culture suffers.
We end up competing with ourselves."
We were advised to listen to employees closest to the customer,
and to create a workplace culture that is conducive to home and
family desires and that reflects common values. "Think of your
employees as stakeholders in the company."
Progressive franchisors are supporting system growth through the
Internet by embracing two venues. Their own Web site is in constant
update mode with fresh graphics and data available for franchise
sales and consumer interaction. Most mature franchisors participate
in over 16 on-line franchise-advertising sites. These electronic
information centers, and electronic catalogs of franchising opportunities,
help prospective franchisees learn more about the company. They
link potential investors to franchise sales departments for one
on one communications, and lead tracking.
A franchising totem at the paragon of leadership within a multi-national
franchise system with over 10,000 units enlightened us in reference
to our survey. "We are a different company every year. Every
year we decide what the consumer wants and then we try like hell
to give it to them. People sometimes get too serious about business.
Business isnt life itself: life is tragic, but business is
not. There are no disasters in business that you cant avoid
- if you see them coming and make the adjustments. In franchising,
if you understand markets, you can do as well in a down market as
you can in an up market. You just need to learn how to bounce in
a binge economy. After all, franchising is a work in progress!"