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Franchise 2.0: Digital platforms are disrupting a 200B industry

The franchise industry is ready for disruption, and new digital platforms driven by transparency and variety of choice are stepping up to take on the task.

Franchise 2.0: Digital platforms are disrupting a 200B industry
[deagreez, A Stockphoto/AdobeStock]

Entrepreneurs are driven to take their businesses to the highest levels of success. For many entrepreneurs, franchising offers a unique chance to take an already great idea and leverage it, providing the perfect opportunity for success when they connect with the right franchisor.

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But the current state of the industry, more than 4,000 franchisor options from which to choose, and the fact that franchise sales brokers and lead portals have cornered the franchise sales industry have created problems. Fortunately, digital platforms are fool-proofing the investments of franchise entrepreneurs and disrupting the $200B franchising industry.

THE PROBLEMS

Brokers and portals—two well-established, but dated, franchise business models—are full of misaligned interests and have cornered the franchise sales industry, leading to frustration and financial problems for both franchisors (holding company) and franchisees (unit operators).

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It is time to bring franchising to the modern tech era. Specifically, two primary factors in the franchise process need to change. First, franchisors need improved options to find the most qualified buyers for their franchises. Second, franchisees need enhanced investment and purchasing experiences in the procurement of franchises. When addressed simultaneously, solutions to these two issues will improve the opportunities for success for both parties, leading to billions of dollars of new revenue created for both franchisors and franchisees.

Additionally, there are flaws in the franchise sales industry. One is the broker and franchise consultant networks that are currently thought of as experts in franchise selection and investment. However, these networks fail at true effectiveness for both franchisees and franchisors. They also charge disproportionately large commissions, contributing to financial strain for new franchisers. In addition, with an often limited amount of franchisor options, they may not always be able to serve the best interest of the prospective franchisee.

Meanwhile, franchise lead generation portals typically provide very low-quality leads, and sell franchise investor information to multiple brands at a time.

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THE DISRUPTION

Digital platforms like Franchise123 (our own) and BizBuySell are beginning to disrupt this $200B industry, fool-proofing investments for entrepreneurs and making it a more straightforward process to own a franchise.

While owning a franchise certainly requires hard work, the effort put in can deliver significant rewards. Any new digital platforms must provide easy-to-follow steps to franchise success, beginning with identifying the perfect franchise for each unique entrepreneur.

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THE SOLUTION

The ultimate solution to problems experienced by both franchisors and franchisees is transparency. By creating an open marketplace in which competition can thrive, interests between franchisor and franchisee will be better able to align.

Digital platforms are delivering this transparency by providing more than 4,000 franchise disclosure documents, upwards of 5,000 company profiles, and a whopping 50,000+ company key performance indicators (KPIs) from franchises around the globe.

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By creating an account with one of these platforms, prospective franchisees can shop all the data in one location. Everyone gains unlimited access in the digital platform’s open marketplace, so franchisors and franchisees can be compared side-by-side to find the best fit.

When buyers and sellers have aligned interests, the opportunity for success rises exponentially.

NEW STEPS FOR FINDING FRANCHISING OPPORTUNITIES

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Selecting the right franchise is key to success in the industry, and digital platforms can help entrepreneurs find their perfect match. Here are three easy steps would-be franchisees can follow to find their ideal franchise.

STEP 1: IDENTIFY YOUR MARKET

In this step, entrepreneurs will determine the top five industries as well as the best location for their business. Next, they will determine their key investment thresholds, and assess the KPIs of their identified franchise opportunities. In most cases, the digital platform is able to narrow thousands of franchise choices down to about 20.

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STEP 2: RESEARCH THE FRANCHISES

This step means digging deeper into the narrowed franchise selections: completing initial interviews, asking any additional questions of the franchisors, financial analysis, and marketing.

STEP 3: DECIDE ON THE FRANCHISE

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Finally, entrepreneurs will conduct franchise interviews, plan a discovery day, and perform budgeting and expense calculations to determine their final choice.

All of this can be made easier with an unbiased, comprehensive digital platform designed for both franchisors and franchisees.

ASSURING SUCCESS AFTER SELECTION

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Unlike brokers, digital platforms can even continue to help franchisees after they’ve selected their franchise. They can do this by:

  • offering technology that provides market knowledge to help analyze local demographics and trends
  • identifying the non-negotiable values and principles of a specific franchise or brand
  • focusing on the ways in which a franchise can solve customers’ problems
  • Following business trends

A number of issues plague the current industry, making things harder for both franchisors and franchisees. The market is ready for disruption, and new digital platforms driven by transparency and variety of choice are stepping up to take on the task.


Jimmy St. Louis is currently an operating partner of Ayon Capital, Franchise Accelerators, and the founder of Franchise123

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