In the world of franchising, not all franchise ventures guarantee success, as many franchisees encounter challenges that threaten the sustainability of their businesses. This opinion piece explores strategies crucial for revitalising struggling franchisees and emphasises the important role franchisors play in leading and supporting them. Drawing from real-world examples of franchises that have successfully turned their fortunes around, it offers valuable insights into how struggling operations could be rescued.
Identifying the Red Flags
The first step in rescuing a failing franchisee business is to recognise the red flags that indicate trouble. Common signs include declining sales, excessive employee turnover, negative online reviews, and financial strain. By being vigilant, franchisees can address issues early on and take proactive steps to remedy the situation.
Reassessing the Business Model
Successful turnarounds often begin with a critical examination of the franchise’s business model. Failing franchisees should assess whether the chosen location, target audience, and product offerings align with market demand. In some cases, it may be necessary to adapt or diversify the business to better meet the needs of the local community.
Example: Domino’s Pizza
Domino’s Pizza, a global leader in pizza delivery, once grappled with declining sales and a damaged reputation stemming from poor product quality. In a bold move, the company overhauled its pizza recipe and significantly upgraded its digital platform model to enhance online ordering. This comprehensive strategy revitalised the brand, greatly improving customer satisfaction and perception. The improvements in product and technology did not just restore Domino’s reputation; they spurred substantial growth, demonstrating the power of responding proactively to consumer feedback and market demands.
Restructuring Operations
Reorganising and streamlining operations is often a critical aspect of rescuing a failing franchisee business. This may involve retraining staff, optimising supply chains, or revising inventory management procedures to reduce costs and enhance efficiency.
Example: McDonald’s
In the late 1990s, McDonald’s faced challenges with declining sales and overly complex menus that hindered kitchen efficiency. To address this, the company introduced the “Made for You” system, which streamlined the menu and allowed for customisation of orders. This strategic shift significantly improved operational speed and order accuracy, which in turn enhanced customer satisfaction. As a result, McDonald’s experienced a revival in both sales and profitability, demonstrating the effectiveness of adapting business strategies to meet consumer demands and operational needs.
Embracing Innovation
Successful turnarounds often hinge on embracing innovation, both in products and operations. It may involve introducing new technology, adapting to changing consumer preferences, or developing unique marketing strategies to reinvigorate the brand.
Example: Boost Juice
Boost Juice, a prominent Australian franchise, rejuvenated its brand by innovating in several key areas: marketing, menu diversification, and digital technology integration. They launched creative marketing campaigns that resonated with their audience, broadened their menu to cater to health-conscious consumers, and implemented advanced digital ordering systems. These strategic enhancements kept the brand competitive and appealing in a crowded market. Boost Juice’s ability to adapt and innovate underscores the critical role of continuous improvement in maintaining the relevance and success of a franchise in today’s dynamic business environment.
Financial Prudence
Financial issues are a common challenge for failing franchisees. It is essential to conduct a thorough financial audit, reduce unnecessary expenses, renegotiate leases, and seek ways to improve cash flow. Sometimes, this may also involve securing additional funding to navigate through the turnaround process.
Example: Subway
Subway, recognised as one of the world’s largest fast-food chains, encountered significant hurdles with declining sales and market oversaturation. In response, the company embarked on an extensive cost-cutting strategy. This initiative included reducing staff numbers and minimising overhead expenses, a move crucial for financial management. By tightening its fiscal approach, Subway was able to stabilise its operations amidst challenging economic conditions. This financial discipline not only helped in maintaining the brand’s market position but also set the stage for a structured recovery, aiming to regain its previous growth trajectory and market dominance.
Effective Franchise Support
A robust franchise support system can significantly transform the fortunes of struggling franchisees by offering financial aid, effective marketing strategies, and comprehensive training. This support helps them navigate tough times, stabilise their operations, and foster growth. Financial assistance ensures liquidity, marketing enhances visibility and customer engagement, and training improves operational efficiency and service quality, collectively strengthening the franchise network for long-term success.
Example: 7-Eleven
Take 7-Eleven, for example. This leader in the convenience store sector is renowned for its robust support of franchisees, providing financial incentives, expert marketing guidance, and thorough training programs. Such consistent and unwavering support ensures franchisee stability and growth, contributing significantly to the brand’s resilience and success. These strategic supports enable franchisees to thrive even in competitive markets, reinforcing 7-Eleven’s reputation as a supportive franchisor committed to mutual success.
Community Engagement
A franchisee’s success often depends on its connection with the local community. Actively participating in community events, supporting local causes, and engaging with customers can foster a positive image and build customer loyalty.
Example: Chargrill Charlie’s
Chargrill Charlie’s, an Australian franchise, actively cultivates community ties by supporting local initiatives and promoting sustainability. This brand prioritises human connections, creating a familial atmosphere among partners, employees, suppliers, and customers. By catering to a varied customer base, they build loyalty with their offering of fresh, homestyle dishes complemented by warm, inviting service. Their dedication to authenticity not only bolsters their brand but also strengthens the community spirit. Through these efforts, Chargrill Charlie’s enhances the dining experience, making it memorable and impactful, thereby ensuring that their authentic approach resonates deeply within the communities they serve.
Patience and Persistence
Rescuing a failing franchisee business is a complex process that often doesn’t result in immediate success. It demands patience, persistence, and a well-structured approach. Turnaround strategies vary and may not yield quick results; however, with steadfast perseverance and a commitment to continuous improvement, success is achievable. This process involves identifying the underlying issues, implementing corrective actions, and consistently monitoring progress. Adapting strategies in response to evolving market conditions and franchisee feedback is crucial. Over time, these efforts can stabilise the business, restore profitability, and ensure sustainable growth, ultimately leading to the revitalization of the franchise.
Concluding remarks
The journey to rescue a failing franchisee business is undoubtedly challenging, but it is not insurmountable. By identifying issues, reassessing the business model, restructuring operations, embracing innovation, and focusing on the customer experience, struggling franchisees can pave the way for a remarkable turnaround. The examples of strong brands like Domino’s, McDonalds, Boost Juice, Subway, 7-Eleven, Chargrill Charlies, serve as inspirations for franchisees in dire straits. With the right strategies and determination, a failing franchisee business can transform into a thriving success story, proving that it’s never too late to turn things around.
Dr. Nigel Bairstow is an academic practitioner with experience working in a variety of marketing roles for large multinational companies such as Alcan Aluminium, Komatsu, Atlas Copco, and 3M. He completed his PhD in Marketing in 2012. His research focus is on b2b and b2c marketing channels.
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