A Look Ahead: Franchise Sales and Growth in the New Year

A Look Ahead: Franchise Sales and Growth in the New Year

The nature of the franchise business is quickly evolving, but it's never been clearer that now is the optimal time to be part of a franchise organization. Franchises drove approximately 3.5 percent of the total U.S. GDP in 2014 and employed more than 8.5 million Americans. As it becomes riskier and more challenging to get off the ground as an independent startup, entrepreneurs are finding that it pays to be part of a larger franchise network that can support growth and boost initial success.

But as with any business venture, launching or running a franchise can have its speed bumps along the way. Achieving optimal sales and growth doesn't happen overnight. It takes ongoing commitment from franchise owners and operators. In 2015, I foresee a new set of challenges for franchises, largely prompted by three factors: new government regulations, crowded market share, and employees predisposed to entitlement and generational differences. If planned for beforehand, these challenges shouldn't affect sales and growth, and the most prepared franchise owners will be better suited to soar through the new year without setbacks.

1) Expenses. In 2015, franchise sales executives must become more cognizant of taxes and operational expenses outside of the norm. While franchisees have always paid income taxes, surcharges and inspection fees are popping up, forcing costs to rise. Certain tax regulations may affect how sales executives operate from state to state, or within city limits in some places. Other examples include higher workers' comp premiums, state contractors licenses, personal property taxes, and fire and occupancy inspection fees. The more you understand on the front end, the easier it will be to help franchisees avoid unnecessary fees whenever possible.

2) Affordable Care Act. New healthcare regulations might also prove to be a challenge for franchisees, because of Obamacare and the new policies corresponding with company-provided healthcare. Healthcare regulations will affect franchises differently from organization to organization, as franchises with fewer than 50 employees are not required to provide coverage, whereas franchises with 50+ employees must provide coverage to all full-time employees. These changes might affect a franchise organization's pay structure and growth model, as franchisees rely more on part-time workers to get the job done, or invest more heavily in programs to provide incentives for employee health initiatives.

3) Hiring. Last, it's becoming increasingly difficult to find quality workers with positive attitudes, especially if your franchise model requires manual labor. It is critical in the new year to spend extra time on hand selecting employees who buy in to your vision and truly want to work hard to get there. Negative attitudes of entitlement or laziness will plague your franchise from the inside out.

No matter how you spin it, it's getting more expensive to run any business, including franchises. Invest time into web and digital marketing campaigns, along with the technology to support your workers. You will see return on the up-front investment as your business matures. Getting market share and moving past competitors will take consistent growth that is not quickly diminished by setbacks and challenges in healthcare regulations, new taxes, or the hiring process. The battle to win customers takes more than a good idea. Success requires attentiveness to the roadblocks ahead to move past the competition and scale for growth in the years to come.

Chuck Pistor is president of Miracle Method, the largest bath and kitchen refinishing company in the country, with more than 120 domestic and international franchises. Learn more at miraclemethod.com or 719-594-9196.

Published: January 20th, 2015

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