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From an industry perspective, the last 12 months have been largely positive for franchise growth and sales, although the industry has experienced several strategic changes. Consumer demand across several franchise sectors is particularly strong, particularly for business models aligned with core services, technology and the booming health and wellness market. From a candidate perspective, we proceed to see demand for concepts that are classified as recession-proof and at all times a refuge for first-time business owners.
What worked in 2024?
Encouraged by IFA’s optimistic forecast for 2024 Franchise economic reportindustry representatives have explored several effective strategies and tactics that bring them closer and closer to their ideal candidates. Here are three specific examples:
• Targeted digital marketing — Franchise development teams are digging deeper, leveraging social media platforms, personalized email campaigns and AI-powered marketing tools to goal, reach and engage ideal candidates. Significantly improved implementation of targeted promoting has enabled brands to focus on potential customers while improving lead generation and lowering acquisition costs
• Enhanced support programs for franchisees — Building on long-term franchisee success, many franchise development teams have strengthened support systems in 2024, from financial planning resources to advanced operational training. This increased investment should increase worker retention rates in the future
• DEI initiatives — To attract a more diverse candidate pool, many franchisors have increased their efforts to reach underserved communities in 2024 – little question thanks to updated SBA lending guidelines. This focus has opened many recent doors and paths to building and growing more robust franchisee networks
Where improvement is needed
Now that we have reviewed the most vital points, it is time to focus on the areas that franchisors still need to improve to achieve their KPIs:
• Localized training — As the influx of international franchisees continues to grow, brands will need to take a closer look at how to tailor training to the specific needs of local markets. These can often be very diverse in nature and require an approach that takes into account regional business regulations, cultural preferences and consumer behavior – which is rarely one-size-fits-all
• Financial transparency — Given the limitations on what franchisors disclose in their FDDs (particularly Section 19), many brands could do a higher job of being transparent about their funds. In the long term, this can translate into greater confidence in the process
• Sustainability — Most franchisee candidates – and consumers – now come from generations that value environmental awareness. Brands should strive to expand green building practices, incorporate greater sustainability and incorporate more eco-friendly products and service offerings into their business models
What to expect in 2025
With the US elections now decided, we have a clearer picture of what we are able to expect in terms of franchise development in 2025. While nothing is completely certain, the following trends appear to be vital aspects for franchise development teams in the coming yr:
• Virtual reality (VR) — An AI twin could be a huge asset for candidates engaged in the franchise discovery process. The ability to take virtual tours of franchise locations and corporate training facilities will make it easier to get a clearer picture and higher meet expectations. Even for candidates in distant locations (again, think international), VR could be an revolutionary way to provide a much more immersive experience
• Customer service powered by artificial intelligence — This is an area that has already advanced significantly, as chatbots can offer realistic support that once required the involvement of a large staff. With recent features that take into account specific business needs, market conditions and performance metrics, franchisors will soon give you the option to significantly improve the provision of targeted recommendations for growth strategies, training and market-specific operational adjustments
• Expansion of micro-franchises and flexible models — Many brands are already experimenting with micro-franchising models, which permit franchisees to operate with lower overhead costs and much less commitment. These recent, flexible business models should appeal to a broader candidate demographic, especially younger entrepreneurs and part-time owners. This is a fundamentally untapped market segment that holds great promise for future growth