Franchise trends to look out for in 2019


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Franchise trends

The following are a compilation of key franchising trends to look out for if you are thinking of expanding or considering buying a franchise in 2019. Some of them were discussed by Michael Vacy-Lyle, CEO FNB Business, in his opening presentation to the 2018 FNB Franchise Leadership Summit, while a few others are international trends yet to make their presence felt in South Africa but cannot be far off:

  • More franchisees owning multiple units and multiple concepts – this is already an established trend, which Vacy-Lyle expected to accelerate. When a franchisee has mastered the tried and tested formula of a franchise system it makes sense to leverage that knowledge by opening another in a new location. And then another. By replicating your success in multiple locations, you can quickly grow your revenues and increase your business’ sustainability, Vacy-Lyle said. This can be taken a step further, and franchisees are increasingly opening other, non-competing franchise offerings as they grow their businesses in an effort to diversify earnings.
  • Consumers increasingly prefer community businesses over national brands, and these national brands are looking at ways to tag with local businesses to create the best of both worlds.
  • Niche markets – Vacy-Lyle said niche markets are gaining traction, whether as an offering of a unique ‘gourmet’ food experience,craft beer or whether in the environmental space of energy saving technology and recycling.
  • Smaller, more cost-effective franchise models – the mall food court may be losing its legacy as the preferred setting for food franchises, as many brands – including Steers, Debonairs and Mugg & Bean On-the-Go outlets – co-locate with petrol station forecourts. An evolving trend is looking at less expensive alternate locations such as stand-alone kiosks,food trucks, corporate catering, campuses, sporting events, community markets,Vacy-Lyle said.
  • With the increase in social awareness, social responsibility is a part of any business, small or big. The consumer is increasingly challenging the role that business plays in society and franchises have to respond in kind.
  • An allied international trend is the emergence of Micro-Influencer Marketing. Gone are the days when franchisors directed nearly 90% of their marketing dollars towards TV, print media, and billboard advertising. In 2016 and 2017, for instance, social marketing took the franchising space by storm. So far, it seems 2018 is the year of micro-influencer marketing,and this trend is set to continue in 2019. Micro influencers are personalities with a large following on social media. These could be content producers,industry thought leaders, and so on. More and more franchises are looking to collaborate with these micro-influencers to boost sales, and build their online presence, and bolster brand awareness.
  • Increased customisation/personalisation of menus or other service – any franchisor should be looking at ways of increasing consumer choice, and tailor-making it to what a customer really wants. The success of RocoMamas speaks to the essence of this trend by allowing consumers to create their own burgers, and increasingly consumers want the ability to create their own dining experience, said Vacy-Lyle.
  • On-demand products/services – Amazon is a great example of this with its same day delivery ethos becoming the norm in the age of instant gratification. Differentiation through delivery remains a big opportunity, he said.
  • More women are becoming franchisees – another existing global trend that will accelerate in 2019. From fast-food to IT management and everything in between, women’s franchises are expanding in every industry.
  • Crowdfunding and franchising – this is an international trend, where more stringent loan requirements force franchisees to look at funding alternatives, including crowdfunding platforms to finance their franchise ventures. Let’s see what crowdfunding has in store for franchising in the next 12 months or so.

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