How to help your franchisees grow during an economic downturn

Economic downturns are inevitable due to their cyclical nature. And in the midst of Covid-19 and its related myriad of economic impacts, downturns are something to be expected. But as a franchisor, should this mean that you let fear and worry creep in, stifling any opportunities for growth or will you plough through, plan strategically and see if you can not only weather the storm but also come out of it stronger. While many brands fail due to lack of planning, yours doesn’t have to. How? We offer eight different solutions for helping you do this.  

1.Prioritise your customers

Your customers are your franchise’s bread and butter. Without them, you’d be lost. This is why making your customers a priority is crucial during an economic downturn. Yes, there will be some customers who will fall by the wayside due to their inability to afford your services, but, yes there’s a but, if you do a good enough job, those customers that are satisfied with your services or products are likely to stay with you. When it comes to customer service, you may also need to consider a pivot in a different direction such as providing complementary services in addition to existing ones. After-sales service will also be important. You need to take this opportunity to show your customers how valued they are and what lengths you will go to in order to keep them.  

2.Communication with financial stakeholders

The most profitable franchises are those with strong communication skills and forward thinking ideas. When it comes to communication, it’s advisable to speak to a tax consultant for several reasons. One: they can help you cut down on costs. Two: they can help you get tax breaks. Three: they can help you communicate with financial stakeholders so that you get better terms on loans and repayments, credit lines, etc.

3.Hire or fire: but do it right

There are differing opinions on the point of employees and employee retention during a downturn. While your competitors might be cutting down on talent, it’s advisable that you try your best to retain yours. This means letting go of the driftwood, where possible, and really showing the rest of your employees that you really value them and will work twice as hard to keep them on board. When you have motivated employees, who you can turn to for advice, support and help, your franchise investment will certainly be worth it.  

4.Marketing, marketing, marketing

Marketing and advertising will be crucial for your franchise during a downturn. Why? It’s simple. Because most of your competitors will be cutting their marketing budgets, losing customers along the way, thereby affording you the opportunity to sweep in on them and add them to your list. Also important at this stage is to continue marketing your franchise business model to new franchisees. There will be many people looking for the security and stability offered by a franchise and by definition, a franchise model is one that’s designed to last.

5.Employ a zero-based budget

A zero-based budget? Wondering what this means? Essentially, it’s a budget that starts from zero. This means forgetting about past practices over the past few years where your expenses piled up without you really noticing, but rather, considering the fact that some expenses are not necessary, or can be reduced. 200 GBP here or 400 GBP there and these cost savings can really build up over time. Therefore, instead of sticking to the same old budget year after year, consider revisiting each line item and seeing where costs can be cut, savings can be made and which expenses are unnecessary altogether. 

6.Networking is key

Think that you need to stop networking? Think again. Attending trade shows, fairs, conferences, events etc. are all key to establishing new networks – whether clients, new franchisees, partners, suppliers or someone else in the value chain. 

7.Communicate with franchisees

A franchisee definition will yield various results, but the most common one is that they’re some of the most important stakeholders in your business. Make sure you listen to them – their concerns and worries and react accordingly. Put out company communication messages regularly and have an open line of communication with them. This will put their mind at ease that you’re there for them in tough times, coming up with solutions to the challenges together instead of letting them swim in deep waters on their own. 

8.Revisit your goals

An important part of franchising is leading your franchisees through tough times. This is where your own mindset comes into play. You will need to look at your goals and see what new strategies you can employ to achieve them, all while keeping your franchisees informed and a part of the process. 

Conclusion

An economic downturn doesn’t need to spell doom and gloom. There are several strategies you can employ to ensure that your franchise operations are functional and profitable and importantly – geared for growth. Keep in mind that while your competitors’ operations might be shrinking, yours should ultimately focus on growing, even exploring master franchise opportunities further down the road to help you bounce back and step into a stronger market position when the economy rebounds. 

Ready to find out more about franchising? Simply get in touch with Fantastic Services to discover all the opportunities available to you with a proven and profitable business model.

• Last update: February 24, 2022

Posted in Industry Insights