Franchises surpass pre-pandemic billing, according to research

According to the 6th edition of the Franchising Frame survey, carried out at the end of 2022, by Praxis Business and the MD Group, 60.3% of the franchise networks surveyed already exceed revenues prior to the pandemic. Among the interviewed brands, 47.3% estimated to close 2022 with a growth of more than 15% in terms of “same store sales” compared to 2021.

131 franchisors in the country participated in the survey, which together add up to around 28,500 franchise units from different sectors. The food sector represents 25.2% of the sample.

New way of doing business

The survey showed that 71% of franchising networks adopted changes in their business models, with 54% having digital channels or omnichannel practices; 47% digitized processes, products or services; 39% adopted leaner business models (with less investment); 29% adopted new products; and 24% adopted new services.

The biggest challenge today is managing people in the franchised units. Next, the profile of the franchisee inappropriate for the business, difficulty in selling new franchises, network marketing and low engagement of franchisees and their teams appear.

Among the ten main difficulties, an unprecedented item appears, which had not yet appeared in previous surveys: management of own or franchisees’ social networks.

Training and development

The survey points out that the biggest reason for closing franchises is associated with the behavior of the franchisee. However, training received little investment over the last year. Just over 45% of the chains invest a maximum of BRL 50 thousand per year in training, while only 16.7% invest more than BRL 300 thousand.

According to Marilia Saveri, partner at Praxis Business, franchisors are looking for franchisees with more soft skills, such as attitude and relationships, but investment in training focused on behavioral issues is still low. “The principle of the franchise system is the transfer of knowledge, how can we say that this is being done if we invest so little in training?”, She says.

Sales channels: a challenge for franchises

For 53.7% of respondents, franchisees see e-commerce as an opportunity to generate more revenue or flow in the store. At the same time, for more than 40% of respondents, franchisees point to e-commerce as a threat.

Even with disagreements between franchisors and franchisees when it comes to digital channels, these represent, on average, about 20.5% of the revenues of the researched chains.

The most common practice in the franchise market, when talking about e-commerce maintained by the brand itself, is charging a percentage on the sale generated by the website (of the total number of respondents who said they charge fees, 85% adopt this method of charging ).

The result also shows that, for networks that operate with different channel types (physical and digital), 27% do not have any integration between them.