What makes a healthy and thriving franchise, now and into the future? This was one of the key questions of an extensive three-month research project I undertook late in 2018. And with franchise systems failing almost weekly (the latest being Lifetime Resolutions), there seems to be no end to franchise systems in the spotlight for everything from underpayment of wages, to franchise owners seemingly paying too much for a franchise with little returns.

Why this is happening I’ll unpack over the coming months as I’m continuing to research what makes a thriving franchise and what is the outlook for franchising as we move towards the third decade of the 21st century.

Firstly, let me focus on my current research findings which resulted in the development of a new model of a robust and healthy franchise system.  I have coined this The Thriving Franchise Model, based on the three P’s.  See the graphic which illustrates this model.

The three P’s of the model are the Pillars, the Pathways and the Petals.  The Pillars provide the foundation for the model and include Prime Leadership, Commitment to Innovation and Effective Execution. A Thriving Franchise is a juncture where the Pillars collide and intersect.

The Pathways, where two of the Pillars overlap shows the results of when two Pillars collaborate. The Pathways are Competitive Edge, Growth and Future Proof and it is these Pathways that corral the franchise towards a Thriving Franchise.

The Petals show the three key elements that synergistically work together to make a strong and robust Pillar.

The foundation that underpins all Pillars is franchisee profitability.  Franchisee profitability was cited repeatedly as the number one factor that will influence the future of franchising, clearly demonstrating when there is no profitability then no amount of leadership, commitment to innovation or effective execution makes a difference.  

The Thriving Franchise Model in more Detail

Prime Leadership

Firstly, It’s about leadership. Not just garden variety leadership but the sector is craving prime leadership. In fact, it’s the lack of leadership in the sector that has created the situation in terms of a Parliamentary Inquiry and the almost weekly negative publicity in everything from a Current Affair to the SMH and the Age.  In the franchise sector, it seems there is limited prime leadership.

Commitment to Innovation

The second Key Theme for a Thriving Franchise is Commitment to Innovation. To ensure a thriving franchise, innovation has to occur where there is a collision between customer experience and franchise profitability.  Those brands that are in the spotlight currently, are there because they have lacked innovation and didn’t keep up with consumer and industry changes and therefore failed to adapt their models to maintain franchise profitability.  

Constant investment in the brand is required to ensure long term sustainability. For some brands, customer numbers and spend decreased, rents increased, and profitability declined resulting in the failure of many franchisees.  When this happens in high profile brands, this makes great fodder for journalists, as displayed by Adele Ferguson from Fairfax taking on the RFG story.

Effective Execution

The third theme, for a Thriving Franchise is around executing systems and processes to ensure both profitable franchisees and, of course, a profitable franchisor. Effective Execution means access to the keys to the kingdom – without it, no level of innovation or leadership capability will have the impact it deserves. Execution is the one thing that can also bring the sector undone. Ineffective Execution is a product of the sector’s lack of leadership.  

I love this quote from Cheryl Bachelder, the previous CEO of Pop Eyes in the USA

‘’A mediocre idea executed brilliantly wins every time’’.  Cheryl Bachelder 

What do you think? Does this Thriving Franchise Model resonate with you?  Please add in your thoughts below.

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