Why Franchise Associations Are a Great Idea For Businesses

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on Oct 18, 2018 8:00:00 AM
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More than 400 McDonalds franchise owners braved Hurricane Michael and gathered in Florida last week to discuss going forward with a plan to independently fund the first franchise association in the company’s history.

The group will call itself the National Owners Association, and its existence could have big implications for the fast-food industry behemoth.  Those implications are indicative of how franchise associations benefit franchise businesses of all sizes.

Equal Growth Opportunities

It may seem like a no-brainer, but the fast food market is a high growth market. The industry currently posts an annual revenue of $200 billion with customers ordering fast food or takeout at least once per week, according to ShopKick. Revenue is expected to increase by two percent through 2020.

McDonalds has seen its growth temper in Q2 of 2018. The company surpassed it’s per share earnings projections by $.06 from $1.93 to $1.99, while it missed its overall growth forecast, growing at 2.6 percent rather than 3 percent.

For franchise owners, this growth is often unevenly distributed with owners operating in more densely populated areas receiving the large hauls. Owners in rural areas are often left to stomach the leftover table scraps.

The creation of a franchise association would allow all franchise owners an equal voice to share their interests with the company. This would allow owners to take advantage of opportunities in their local markets without having to wade into bureaucratic waters to get approval.

Some opportunities may include negotiating franchise agreements, or influencing supplier and marketing programs and their expenses.

Forging New Customer Bases

Having more autonomy to make decisions for each franchise, franchise owners will also have the freedom to attract new customers with strategic, local marketing plans.

For franchise owners near wealthy areas, this means they can directly target those customers in their marketing plans without affecting other local franchises.

One example of a franchise association helping to expand businesses is Denny’s Franchise Association. The Association helped Denny’s do the legal work to sell gift cards both in store and through third-party vendors. According to some estimates, this helped boost Denny’s sales by nearly 10 percent.

Why Join or Start an Association?

As a business grows and day-to-day operations become more complex, franchised businesses often set the interests of franchise owners aside. This can de-incentivize potential franchisees from investing in a franchise.

Franchisee Associations often help build a stronger franchise. They can help with legal work, get franchisees involved in advertising and purchasing issues, and create opportunities for owners to get involved with the franchise.

Whether you’re a part of a local franchise, or a national one such as McDonalds, getting involved in or starting a franchise association greatly benefits everyone involved.

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Topics: Capital, Cost Reduction

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