2023 has been a challenging yet hopeful year for many franchises, as we continue to emerge from the peak-pandemic challenges of the last few years. As franchises across industries work to rebound and become better than ever, which trends are on everyone’s minds? With just a few weeks left in 2023, we’ll be exploring 4 franchise trends that are shaping how franchises are strategizing for the end of the year and beyond.
Enhanced Customer Experiences
Focusing on delivering an exceptional customer experience – however that looks for your franchise’s individual niche – is critical to standing out in an expanding franchise marketplace. Today’s customers have more options than ever, and they’re also wiser than ever; they know what they want and what they can expect, and they’re not afraid to shop around in order to find it.
Research has shown that 30% of customers are willing to pay a price premium for better or more tailored service. In other words, developing an exceptional customer experience not only can boost customer loyalty, but it also can increase your profits. Customers are looking for more than a basic product or service – they’re looking for personalized experiences that make them feel like they’re getting the VIP treatment. Consider ways to incorporate interactive and customizable technologies to make this personalization easier. It might be as simple as an app for mobile bookings or on-demand orders, or something more in-depth for more customization options. Set your business apart with convenient, useful, interactive, or even immersive “experiences” to enhance the interaction between customers and your brand.
Small Businesses Enter Franchising
As more people leave behind “traditional” jobs to pursue their passions and dreams of owning a business, more small businesses are joining the franchise world.
“Small businesses are the backbone of our country’s economy and since the onset of the pandemic, there’s been a resurgence of entrepreneurs looking to follow their dreams of owning a business they’re passionate about. These types of franchises will continue to grow,” CEO of Authority Brands, Craig Donaldson, told Entrepreneur.
This trend aligns with what we’ve seen in terms of overall small business and franchise growth throughout 2023. Research shows that franchise profitability has increased by 19 percent since 2022, with top industries currently seen as retail, health/beauty/fitness, and business services. While there is still a demographic imbalance in who owns these franchises, the franchising industry has seen a notable rise in the number of women franchisees and franchisees of color. As more small businesses join in, the hope is that this diversity and innovation can continue to grow and thrive.
Sustainability in Every Sense
Franchises are looking to improve sustainability in multiple ways. The most attention-grabbing, of course, is the shift towards “greener” and more environmentally-friendly modes of operating. For different franchises, that could look different. It might involve a shift towards more sustainable packaging options, eco-conscious manufacturing, offset and replanting initiatives, new incentive programs, and more. Positioning one’s brand as sustainable – and following it up with clear, measurable actions – can advance the brand in powerful ways. Half of consumers report paying a significant premium for products and/or services branded as sustainable or socially responsible, so a “green” shift can have a positive impact on profits, too.
There’s also another sense of sustainability to consider: the idea of being resilient and lasting through even chaotic times. Franchise owners have been through a lot in recent years, and although the future looks a little more stable, it is no time to get complacent. Franchises should have contingency plans in place to address potential disruptions, whether that’s diversifying the supply chain, avoiding labor shortages by focusing on retention, investing in employee development to add new relevant skills, or other strategies. It’s also worth considering how to pass those plans on in order to offer a sustainable, stable, and positive experience to customers.
Rethinking Recruiting and Retention
A major part of franchise success relies on staffing – but franchises, particularly in areas like food, retail, and other customer-facing industries, often find themselves with high turnover rates and large numbers of minimally-invested employees. Instead of focusing solely on recruiting, today’s smart franchises are putting a heavier focus on retention.
Consider some of the recent numbers. A majority of franchise owners surveyed report recruitment and retention as their biggest hurdle (24%), and 48% say hiring was “very” or “somewhat” difficult in the last year. They’re facing low applicant numbers and significant competition, while struggling to find candidates who possess the needed work experience, soft skills, and technical skills. In hopes of combatting these difficulties, 29% say they’ve increased compensation, while 19% invested in retention and 10% boosted benefits packages. Retention efforts might also include a focus on career development and upskilling to help employees see a long-term future with your brand.
About the Author
Nancy Estep-Critchett is a founding Partner of Blue Rock Search, with oversight of the Franchise Practice. She has 30 years of successful working experience as a business advisor and executive recruiter in the franchising space. Nancy has built solid relationships which have spanned decades with industry professionals and internationally recognized brands.