The key theme at this year’s FNB Franchising Leadership Summit was “Disruption”.  Unless franchise business owners start thinking out of the box and embracing the disruptive forces of innovation, creativity and technology, they risk losing market share and ultimately their existence.

At Franchising Plus, we often see the tension between market realities and conventional business models and the disruptive impact this has on franchises.  Some franchise systems find it difficult to adapt quickly, as they also have to deal with some inherent tension between franchisees and the franchisor.  However, preserving the status quo can lead to obsolescence.  Just think of what happened to franchises in the video rental market.  Disruptive technologies such as Netflix destroyed their market share at a rapid rate.  Conversely, a retailer like Musica adapted to these changes and started to introduce digital entertainment products and gaming and is doing well.

Oftentimes disruption emanates from an innovative approach to solve a problem. The idea for Uber started when some friends couldn’t find a taxi late at night.  When considering whether your franchise can be disrupted, question whether the business is still meeting consumer needs in the most convenient way.  Are you using the latest available technology?  Are you communicating in a way that is still relevant to your target market?  For instance, if your target market is youth orientated it’s imperative to use social media.

Another aspect to consider is customer centricity, are you giving your customers what they want?  Customised gourmet burgers is a massive trend right now, and even McDonald’s has introduced a platform called “Create your taste” to allow customers to construct their own burger.  A few years ago this would have been unthinkable as the fast food giant is famous for sticking to age old favourites such as the Big Mac.

Forbes magazine recently published an article on industries ripe for disruption and listed real estate as one of them.  What would happen if someone figures out how to bypass the traditional process for buying and selling homes?  The same is true for financial services, and other industries with intermediaries.

Disruption needn’t be a threat, it can be an opportunity.  While disruption aims to break traditional stereotypes in the business world, it also presents opportunities in tough economic times when consumers struggle to make ends meet and are constantly looking for value for money.

Look at your franchised business and ask:

  • Are we giving our customers what they really want? Do we know what they want?
  • Do we control our own distribution channel?
  • Are we using the latest technology to improve efficiencies?
  • Is it easy to do business with us?

As Philip Kotler famously said, if you keep doing what you are doing now, you may be out of business in 5 years.  Contact us for a free consultation on optimising your franchise system.