Labor Shortages, Inflation, Regulatory Issues and More Will Impact Franchising in the New Year
There has never been a more exciting time to be in franchising than right now. With a projected 805,000 franchises in the U.S. in 2023, we are experiencing a historic period of entrepreneurship and growth. In recent years, private equity companies have taken note of franchising’s merits and have made major investments in franchise companies. There has been an emergence of umbrella franchisors that have formed and pooled resources to grow brands and make them stronger.
But franchising’s appeal is not just about big profits for big companies. The transformative impact of franchising is most profound on a local level. Investing in a franchise can be a game-changer for everyday people and their communities. Franchise owners have the opportunity to build generational wealth for both themselves and their families, all while playing a pivotal role in job creation and contributing to the growth of their local economies. The IFA’s 2023 Economic Outlook Report projected an incredible 254,000 jobs would be created in 2023 thanks to franchising.
As the franchise community grows, so does its family-like culture. With leadership from the International Franchise Association, franchise professionals from every industry have rallied together to champion franchise business owners and promote the benefits of the franchise business model. The power of franchising has never been stronger.
On the flip side, despite these positive strides, it hasn’t been all rosy for franchising. As we move into 2024, franchising is facing some tough obstacles. Some of the most noteworthy challenges of 2023 have been the NLRB’s Joint Employer Rulings, labor shortages and inflation. We asked franchise thought leaders to share insights on the biggest issues they believe franchising will encounter in 2024. Here’s what they had to say.
Bottom Row, from left to right: Mark Young, Randy Abernathy
Jack Monson, Brand J, Social Geek Radio
“The rapidly changing tide of finding and engaging new candidates is the most critical issue facing franchisors. The marketing tactics that have worked for 15 to 20 years no longer yield the same results. Franchise pros need to step up the branding for their systems and their personal brands, as well as share messages in new channels.” —Jack Monson, Brand J, Social Geek Radio
Rafael Alvarez, Latino Franchise Association (LFA)
“There are numerous issues that affect franchising, such as federal and state regulatory changes, labor shortages, supply chain challenges, competition, market saturation, etc. I will focus on lead generation, which, for me, is the most important issue in franchising today. While organizing the Franquicias Fest Expo in New York City, I spoke with leaders in franchising. Many expressed concerns about not being able to recruit quality candidates to continue growing their franchise brands. Lead generation not only enables franchisors to expand their brands and increase revenue but also helps maintain the franchise ecosystem. Lead generation strategies should be a top priority for both franchisors and franchisees in 2024.” —Rafael Alvarez, LFA
Eric Slaymaker, Wingers USA, Inc. / Wingers Alehouse
“It still always comes down to ensuring that franchisees are highly successful and profitable. Attractive unit-level economics will always drive success in the franchise world. We spend most of our time at Wingers Alehouse focusing on ways to continue to make our franchisees more successful and profitable, especially while working in a consistently challenging environment of rising costs — as has been the case for the past three years. Franchisors must create a relationship with their franchisees that is mutually reliant on each other’s success.” —Eric Slaymaker, Wingers USA, Inc. / Wingers Alehouse
Mark Young, myHRcounsel
“From what we hear, one of the biggest challenges our franchise clients are struggling with is keeping up with legal compliance at the franchisee level. Before, it was a benefit having the franchisor provide the franchisee with legal documents, such as policies and procedures, but that is no longer allowed because of the Joint Employer ruling. The Joint Employer Ruling limits what a franchisor can provide to its franchisees. Also, maintaining a database of all 50 state laws is time-consuming and expensive for franchisors. This leaves franchisees frantic to find someone to help them. Many still think their only option is spending thousands of dollars a month on legal fees, which will eat into their margins and in a tough economy can be devastating to a franchisee.” —Mark Young, myHRcounsel
Randy Abernathy, Mint Condition Inc
“Franchising needs to pay attention to the NLRB and their rulemaking. There are those looking to kill the franchise model.” —Randy Abernathy, Mint Condition Inc.
Jeff Roberts, Property Management Inc.
“Training, support, growth and the ability to provide options to diversify for different opportunities within a chosen industry are major concerns for franchising moving into 2024.” —Jeff Roberts, Property Management Inc.
