5 Challenges Faced By Franchises & How They Can Overcome Them

Today’s economic landscape poses unprecedented challenges to many businesses and franchises are no exception. Rampant inflation, increasing customer expectations, and recruitment challenges are among the numerous threats faced by franchise brands in 2023. 

In this article, we outline several key challenges facing franchise businesses and the actions that franchise leaders can take to overcome them and turn threats into opportunities.

1. Maintaining franchise brand consistency and quality
2. Fierce competition
3. Recruitment and retention of franchise staff
4. High operating costs
5. Customer expectations
6. Steps To Overcome Your Franchise’s Challenges

1. Maintaining Consistency and Quality of Your Franchise Brand

Operating numerous locations regionally, nationally and/or internationally means that franchise businesses sometimes struggle to maintain brand consistency. Some franchisees may not be delivering the brand promise as consistently as the head office would like, and this may be damaging to the brand overall. 

Adding to some franchisors’ woes is the fact that in today’s feedback economy, it is the customer’s opinion that shapes the perception of brands. After all, 90% of customers report that online reviews play a significant role in their purchase decisions. 

Without the ability to manage online customer feedback online, such as reviews, franchise brands run the risk of losing influence over the customers’ perceptions, and they remain blind to the rich insights which can be gleaned from online customer feedback.

Solution:

To establish greater influence over customer perceptions, you need a technological solution capable of managing online customer feedback. As a minimum, your chosen technology should enable review requesting and responding at scale. 

Having such technology could empower your franchisees to request reviews and tap into the ‘silent but happy majority’ whose positive opinions of your business compound over time, establishing trust with potential new customers as well as boosting your rankings in Google’s local search results. 

Requesting feedback is only half the battle – responding to feedback, whether negative or positive, demonstrates to your customers that you care about their experiences with your business and that you are actively listening to their views to improve your products and services.

Reviews are, of course, only one form of feedback. Digital surveys and social media comments are also rich forms of feedback that must be managed to ensure the health of your franchise’s online reputation. 

Savvy brands recognise that feedback is critical to business growth, and they equip themselves with technology to manage feedback anywhere and everywhere it might arise. You must make sure your franchise company has the technology it needs to manage increasing amounts of online customer feedback. 

Suggested resource: Introducing Reviews by Reputation

2. Fierce Franchise Competition

To stand out ahead of the competition and win customers, franchisees need to differentiate their business from their nearest competitors. Traditionally, this is done through marketing and advertising campaigns. While these activities are still crucial, many businesses encounter diminishing returns as they increase investment in these areas.

Solution:

Gain an advantage over your competitors by making the most of public feedback data through a competitive intelligence solution. 

One key benefit of using Reputation’s Competitive Intelligence products includes being able to assess your competitors’ ratings, reviews, customer sentiment, and response rates to learn the “why” behind their reputation performance. With this information at your disposal, you will be better able to identify emerging trends and plan your advertising campaigns around emphasising your strengths while highlighting your competitors’ weaknesses. 

Competitive Intelligence enables you to capture and analyse data from the full competitive landscape of your industry, providing dependable actionable insights to inform your business decisions. Research shows that 89% of businesses believe that failure to adopt a strategy based on competitive intelligence will result in a loss of market share. 

Take advantage of your competitors’ data now to ensure your franchise company acquires more of the market and doesn’t shrink at the hands of fierce competitors.    

Suggested resource: A Guide to Competitive Intelligence (2023)

3. Recruitment and Retention of Franchise Staff

Skills shortages are affecting many industries, and employee turnover and retention are ongoing problems for all companies, including franchises. High turnover compounds other problems within businesses, including increasing operational costs and damaging the customer experience as experienced staff leave to be replaced by inexperienced ones. 

Solution:

Therefore, it is imperative that your franchise business takes steps to manage the employee experience by implementing a Voice of the Employee (VoE) programme. 

Central to any VoE programme is the deployment of employee voice surveys. These provide business leaders with insightful data about what delights or disgruntles workers. Business leaders can then implement measures to improve the employee experience and thus retain staff.

Customers aren’t the only ones reviewing your business online – your employees and former employees also leave reviews on job sites across the web. Start managing these employee reviews with an online review solution in addition to deploying regular employee voice surveys, and you will be on the right track where your recruitment and retention efforts are concerned. 

Suggested resource: Why You Need To Administer Employee Surveys

4. High Operating Costs For Franchises

Rising energy costs and a cost of living crisis are squeezing both the consumer’s purse and the profit margins of your businesses. Meanwhile, interest rates make borrowing to invest in your company more difficult as your board of directors demands cuts to be made to spend. Without careful management of financial resources, the current financial turmoil facing the Western world could spell the end for many organisations.

Solution: 

To cut down costs at your organisation, it can be worthwhile to audit your current tech stack and consider whether the technologies you use truly aid operational efficiency or if they are a drain on time and money.

Often, businesses use Customer Relationship Management (CRM) software alongside multiple feedback and Customer Experience (CX) management systems, with each operating in silos while adding a hefty sum to the company’s outgoings and decreasing operational efficiency. 

You can begin cutting operating costs at your franchise by consolidating your CRM and your feedback management tools into a single easy-to-use platform that enables you to manage customer feedback and communications anywhere on the web at any stage of the customer journey.

Suggested resource: What Are Your Current Business Priorities? 

5. Evolving Customer Expectations

Across all industries, customers expect more from businesses, especially as consumer spending power is reduced by rampant inflation and exorbitant fuel prices. 

For example, our research shows that hospitality customers are dining out less frequently but spending more when they do venture out. These behaviours mean that the customer experience is now more important than ever for businesses in the hospitality space. 

Similarly, Salesforce’s research into customer expectations shows that ‘66% of customers expect companies to understand their needs and expectations’. 

If your company fails to understand customer expectations and needs, you risk losing new and existing customers to your competitors. 

Solution:

Your business needs to be able to understand customer needs and expectations, and in today’s digital world, that means having the technology to enable you to understand patterns in customer feedback data, including customer sentiment around their experiences with your company.

Specifically, you need technologies that enable customer sentiment analysis through Natural Language Processing (NLP). These technologies can equip your CX and operations teams to simplify vast quantities of customer feedback data so they actually see what matters to customers and use this information to improve the customer experience.

Suggested resource: How to Get Started with Customer Sentiment Analysis

Steps To Overcome Your Franchise’s Challenges

If your franchise business is facing the challenges listed in this article, you must:

• Start requesting and responding to customer feedback online to improve your visibility and your credibility with potential customers.
• Take advantage of your competitors’ public feedback data so that you can capitalise on your strengths and exploit their weaknesses.
• Implement a VoE programme to ensure that you take measures to retain your staff and reduce turnover.
• Cut costs by consolidating your CRM tools and your feedback management systems into a single, comprehensive software solution.
• Analyse customer sentiment in reviews, surveys and on social media to gain insight into what your business is doing well and where it needs to improve. 

Discover today how Reputation can enable your franchise brand to transform all feedback into fuel for growth within one platform.