By Eric Parker

There is little doubt that 2016 promises to be a difficult trading year. We can expect the Rand to devalue further, interest rates to rise, increased taxes and further job cuts. Additionally, the average consumer has maxed his credit limits and finds himself totally over extended and in severe debt. The prevailing drought will also hit the economy and consumers at various levels. So in this challenging environment, what should the role of the Franchisor be in 2016?

Should the Franchisor help the marginal franchisees that are expected to close?

The answer is a big YES, provided the franchisee deserves to be helped i.e. he/she is an owner operator that has tried his/her best to make the business successful.   Here are some ideas I believe a Franchisor should implement in 2016:

  1. Put a training programme together to show all franchisees how they must adapt their businesses to the current economy. This is a preventative measure that needs to the implemented before it is too late.
  2. Facilitate a programme that enables and encourages strong franchisees to acquire marginal franchises for turnaround purposes.
  3. We don’t believe it is a good idea to have a royalty break – Rather use the royalty to do positive things for the franchisee i.e. local marketing.
  4. Work closely with suppliers and service providers. Be transparent with them and try to secure extended credit and special deals to assist the margin
  5. al franchisees. Remember suppliers are also finding it difficult and it will be a buyer’s market.
  6. Don’t cut back on marketing but put more emphasis and allocation of expenditure on promotional activity. Special offers must be tailored to prop up quite times. Consumers will be looking for value in this economy.
  7. Difficult times call for an appropriate price strategy, tailored to promote quiet times and Key Value Items (KVI’s). Remember you can’t be the cheapest and the best and consumers are looking for value, but not at the expense of quality.
  8. Your franchisees need assistance, motivation and mentoring in these difficult times, so make yourself and your staff freely available to them.
  9. Consider developing an I.C.U. team that is available to go out and assist franchisees in distress. This service could be charged for on a deferred payment basis as a performance improvement incentives.

Franchisors should be proactive to ensure franchisee success and survival in 2016. The time to act is NOW. Franchising Plus is busy putting similar plans in place for a number of franchisors. If you are interested in meeting with us to optimise your franchise, contact us

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