Strategies To Compete In A Challenging Environment

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There are a number of giant franchise networks, (e.g., McDonald’s, Subway, Blockbuster and Century 21), that have reached invincible proportions – or so we may believe, given their level of size and brand awareness. This perception of invincibility is, however, often misplaced. Indeed, the business environment facing most companies, including the “invinciblesâ€? of the franchising world, is actually exceedingly tough and challenging, and some fundamental changes to franchise business concepts have been made by many of the larger franchise networks to continue to sustain or improve their competitive advantage.

During the past year there are many examples of well-known franchise companies (or holding companies) featuring some type of issue surrounding profitability (e.g., UPS and GNC in the US, French Connection in the UK), sales (e.g., Papa Johns and Snap-on Tools in the US, Marks & Spencers in the UK), store closures (Krispy Kreme and Howard Johnson’s restaurants in the US, Jean Coutu in Canada and McDonald’s in Jamaica), or related crises (e.g., staff cuts).

In addition to internal factors there are a number of external factors franchisors have little to no control over that contribute to the current challenging operating environment. Competition is intensifying in many sectors. Technology is constantly creating new opportunities and threats. There are changes to the regulatory environment. Finally, customer tastes are also changing – providing a moving target.

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