RETAILERS ADAPTING TO THE NEW ECONOMY
Franchise Consultants See Shift in Retail Franchising in 2012
October 2011: HOMEWOOD, IL – Based on the observations of over 11,000 businesses since January of 2009, franchise consultants at iFranchise Group have identified four ways in which retailers are adapting to the new economy.
“More than ever, retailers must stay on the cutting edge to keep their clients satisfied, while at the same time keeping profit levels where they should be,” says Mark Siebert, franchise consultant and CEO of iFranchise Group. “Therefore, we’re seeing a number of businesses adopt practices and tools that help keep them competitive – ranging from how they structure their business to the types of products and services they offer.”
Business practices that are becoming more prevalent among retail concepts include:
Using franchising for specialty product distribution. From home cleaning and kitchen equipment, to fashion accessories, to gourmet foods and drinks, specialty retailers that may not have originally started out as franchises are consistently turning to franchising as a means of distributing their products on a broader basis, while also controlling costs. Some companies manufacture their own goods and establish franchise systems as a means of getting their unique products in front of more retail customers. Others choose franchising as a means for international expansion beyond their current domestic distribution channels. Even more are start-up concepts that turn to franchising in order to grow beyond what their own resources might otherwise allow. Whatever the scenario, say experienced franchise consultants, franchising is a vehicle that is highly flexible, scalable, and applicable to just about any niche-specific retail product on the market.
Flexibility in real estate. From developing franchise agreement language that contemplates current retail space lease terms and pricing, to including options for storefront and kiosk-based franchises, in today’s real estate environment, franchisors have learned that flexibility is key. “Franchisors need to understand what a franchisee will be paying for their store location in all kinds of markets, and how this will affect the bottom line,” says Siebert. “They also need to structure their franchise agreement terms to extend beyond what a typical initial lease term might be – it doesn’t make sense to have a franchise agreement that expires halfway through a franchisee’s store lease term.” Adds Dave Hood, franchise consultant and iFranchise Group President, “Franchise agreement language for retail franchises should take into account the possibility of a franchisee needing to relocate the business; whether from a stationary storefront site at the end of a lease or, in the case of a kiosk format, when a move that is required, often on short notice, by the local mall operator.”
Multimedia online training. Effective training is a key component of any retail franchise system, due to the inherent large numbers of employees and often high employee turnover rates. And, as more business functions are brought online, retail franchises are finding that today’s technology lends itself well to both franchisee and employee training. Online training systems can be used for ensuring franchisees are sufficiently trained in key aspects of operating their retail businesses on a day to day basis. These same types of systems can apply to retail location staff, as well. Says Siebert, “To ensure that their franchisees’ staff have adequate product knowledge and can explain all the appropriate features, advantages, and benefits to customers, we’re recommending more franchisors provide Internet-based training through interactive learning management systems that include online modules, participant tracking functions, and even multimedia quizzes.”
“Green” retailers turning to franchising. Environmental responsibility is perhaps one of the biggest buzz words in franchising, and business in general, today. Retail concepts are certainly no exception, say franchise consultants, with franchise systems popping up everywhere that offer products such as organic foods, eco-friendly cleaning products, and recycled office products (including everything from ink cartridges to cell phones).
Business owners and franchisors in the retail sector, or any other type of business, who are looking to evaluate their business model and identify and adopt current best practices are encouraged to contact iFranchise Group franchise consultants at [email protected]chisegroup.com or 708-957-2300 for more information.
About iFranchise Group: iFranchise Group is a leading franchise consulting firm that offers the skills of the nation’s top professionals in franchise strategic planning, operations training and documentation, franchise marketing and sales, advertising fund management, franchise recruitment, and development of Internet-based applications for emerging and established franchise companies worldwide.