The future of franchisng in a digital age
The rise and rise of digital and social media coupled with the increasing popularity of  on-line businesses raises the question of the future of franchising in the digital age. With challenges evolving with some of Australiaâs biggest big franchise brands (Eagleboys, Seven Eleven to name a few) many franchise commentators argue that traditional franchising models have reached a degenerative stage and some believe franchising as a business method will need to be reconstructed.
The reality is that e-commerce and digital platforms can provide a prosperous business model that can co-exist with traditional brick and mortar models. The future of franchising requires an intelligent application of franchising theory that may see the adaptation of new formats to develop convergent business models. Franchising has experienced many challenges over the past 50 years, and in order to progress it needs to create new models to fulfil a franchising rich future.
Transitioning to a new age of FranchisingÂ
The refinement of a new breed of franchise model and the proliferation of traditional formats inevitably present contractual complexities, property and decision rights issues. These challenges are real and yet are not well understood by many franchisors and their advisors. In fact, one of the main threats to the present and prospective opportunities of existing and new franchise systems is sticking to old model of setting initial, ongoing, and exit fees.
Forward-thinking franchisors should urgently buy time by reviewing their business/revenue model and explore contemporary structures that blend the latest research in agency and proprietary modelling to maximise participation and goal alignment.
For many franchise systems, their revenue model is often driven by market trends rather than sustainable economics. However, if a franchisor is to successfully attain adequate compensation for substituting company-store risk adjusted cash-flows for franchise-derived cash-flows, it must account for monitoring costs, risk-sharing and efficiency gains in designing its revenue model.
Future of Franchising: New models to consider
Franchising traditionally lags behind other types of businesses when it comes to adopting technology. But in recent years, new and old businesses have learned the value of rising to the challenges of changing consumer habits and tastes. The race to lead the pack is poised to intensify as franchising continues to evolve.
A prospective entrepreneur who sets on the adventure of establishing a hamburger or  pizza chain for example will have to do more than simply offer fast food at a fast price. Prospective franchisees and customers in the future will demand much more. The concept needs to be shaped by and infused with innovation across all aspects of its operation, including maximising the opportunities presented by technology.
For example while the fast food franchise is a relatively traditional model, Uber Eats which existed as a side project of the road sharing service seeks to challenge that model offering new ways to deliver favourite meals to its consumer. The company wanted to mobilise its fleet of drivers to deliver more than just humans, and the take away market is now part of its new business model. This service already exists here in Australia and will likely change the way that franchises operate in the future, brining new challenges and opportunities to traditional franchise models.
Franchising evolved from a need to innovate traditional business models. Franchising requires a flexible approach to create systems and processes that continue to serve customers and the Franchise owners and operators. The ongoing development of franchising is one that will be required to scale with the challenge of continuing innovation in an increasing digital landscape, further creating a franchising rich future.
Dr Maurice Roussety is a Consulting Strategist for DST Advisory and Lecturer in Small Business, Franchising and Entrepreneurship at Griffith University in Queensland, Australia. He has worked with leading organisations such as Queensland Transport, IAG, Westpac, Australia Post, Coles Myer, Red Rooster, Commonwealth Bank, ACCC, and Optus. Maurice holds a PhD in Intellectual Property and Franchise Goodwill Valuation. He also holds a Masterâs degree in Leadership and in Business Administration. He is available for consulting and public speaking engagements and can be contacted further at maurice@dstadvisory.com or you can visit him at www.mauriceroussety.com.au
