Nation’s Restaurant News:
A mid the deepest economic slowdown since the Great Depression, restaurant franchisors are enhancing or developing programs to broaden their franchisee bases as a means to grow business.
Franchisors as diverse as KFC, Pizza Hut, Domino’s Pizza and Little Caesars Pizza all aim programs at minorities, women and veterans. Domino’s, for example, offers veterans a $20,000 discount off the franchise fee.
“Besides growing same-store sales, franchisee recruitment is the only other way to grow the business for a franchisor,†says Matthew Shay, president and chief executive of the International Franchise Association, which represents franchise systems, franchisees and suppliers.
While the franchising industry as a whole is expected to see a decline in the number of establishments, jobs and economic output in 2009, an IFA report recently forecast the quick-service and full-service restaurant sectors to see small net increases in units.
“Franchisee recruitment is more important than ever in this slow economy and tight credit market,†Shay says. “Franchise prospects are looking for ‘safer’ investments that offer greater financial security and lower risk. It’s back to basics in recruitment programs. The emphasis for franchisors is on ‘unit economics.’ They must be able to demonstrate that their franchises are good, solid business opportunities, backed with a track record, a well-known brand, and with support and operating systems that give their franchisees a competitive advantage.†In recruiting new franchise demographics, such as veterans, minorities and women, financing remains a big issue, Shay says.