Positive franchise forecast for 2011

Seven in 10 franchisors intend to recruit more franchisees in 2011 as their optimism returns to pre-GFC levels, new research has revealed.

According to 10 Thousand Feet’s Franchisor Expansion Study for 2010, 68% of franchisors believe they will recruit more franchisees in the next 12 months.

Ian Krawitz, head of intelligence at 10 Thousand Feet says research shows franchisees are also more optimistic, with a 4% rise in sentiment in the past 12 months.

In light of the figures, Krawitz says 2011 is shaping up to be a promising year for people looking to purchase or grow a franchise.

“During the GFC, people were cautious of stepping into a franchise system due to the financial commitment. With confidence growing, people are looking at franchises as a viable option and are progressing through the pipelines a lot faster,” he says.

Krawitz identifies food, coffee and mortgage broking as strong sectors for franchises, in addition to the rental market.

“Food has been strong throughout the whole GFC because it’s a necessity. With regard to mortgage broking, even though there was a softening in the homebuyers market, it has gone well in the last 12 to 18 months because it has a good business model,” he says.

“The rental market has obviously performed very strongly because people are saving money by renting instead of buying items.”

“Coffee is also an area of interest because gaps in the market are starting to be filled – there are a lot more types of coffee formats around.”

“In addition to the obvious ones like Gloria Jeans and The Coffee Club, there are opportunities in a drive-through setting – such as Muzz Buzz – and the onset of deluxe coffee machines in office places.”

Krawitz identifies the retirement and nursing home sectors as underperformers, as franchisees often have to compete with larger organisations for government grants and must undergo lengthy tender processes.

In addition to its annual Franchisor Expansion Study, 10 Thousand Feet recently named its top 10 franchises, with mortgage broker Smartline taking out the number one spot.

This was followed by Signwave, Mrs Fields, Mortgage Choice, Mister Minit, Snooze, Mr Rental, Snap-on Toos, Telcoinabox, and Gametraders.

The awards encompass franchise systems that have elected to have their franchisees surveyed and rates the best performers according to how satisfied their franchisees are.

Smartline had a record win, taking out seven of the nine awards on offer, which managing director Chris Acret attributed to the company’s strategy.

“Adding new products to our model to include life insurance and other personal risk insurance has really paid off for our franchisees,” Acret says.
Krawitz says a common theme displayed by the winners was the level of contact they maintain with their franchisees.

“They’re really making sure they’re guiding their franchisees to success, with regular contact and quality conversations,” he says.

However, Krawitz says franchisees also need to take a proactive approach with regard to communicating with their franchisor to ensure maximum success.

“Support is going to dictate so much of your success as a franchisee, particularly as you develop more working parts of your business,” he says.

“A good relationship with your franchisor is not going to be handed to you on platter; you have to make it happen.”

“Facilitate open, frank and honest meetings with your franchisor… Communicate how you’re feeling and ask for lots of feedback.”