What Franchise - Issue 21.2

“IF YOU’RE NOT IMPLEMENTINGAI, YOU’RE IN THE MINORITY” Suzie McCafferty QFP, Founder & CEO, PlatinumWave Franchising “GET FOUNDATIONS IN PLACE NOWFOR FUTURE GROWTH” Phil Archer, Head of Business Planning & Funding, the dt group Should franchisors be creating new top-down AI processes that take responsibilities away from franchisees, or should franchisees be empowered to drive their own businesses forward by utilising AI tools themselves? It reminds me of when social media first arrived. We all had to debate the merits of franchisors taking complete control and disseminating content to the network, versus giving the franchisees the autonomy to experiment themselves to see what made the biggest difference. Some brands are still wrestling with this decision ten years on, but I think most of us are well aware of the risks of ‘missing the boat’ through procrastination, so make concrete decisions about how you’re moving forward with tech in 2026 and stick to it. That said, few of us have any idea what new tools may be landing in the next month, let alone year, so truly setting anything in stone may be a stretch too far – but get off the fence we must! AI is transforming recruitment, training, customer experience, data collection, sales and decision-making. If you aren’t in the implementation phase with it in 2026, I think you’re going to be in the minority. Banks are approaching the market more directly. Given the increased competition between them, they see this as protecting their interests. The downside is that they are not set up for this kind of direct approach with end clients. More clients will multi-propose tomultiple banks, banks will see their take rates decline and their on-costs go up, and service levels will fall for everyone. For franchisors, increased disclosure rules around financial services will see some having issues with ‘earnings’ from commissions, introduction fees and sponsorships coming under threat. Franchisors will be required to disclose any arrangements where they benefit financially frombusiness their franchisees do with nominated suppliers. The impact will be that franchisors have to restructure their model and may need to cut costs or pass cost increases on to franchisees. General business costs will continue to rise, including increases in premises fit-out costs, staff costs, taxes and rates. Recent and planned set-ups will be under significant financial pressure if there is not a customer price increase – and even then, that assumes customers will pay it. Recent set-ups are most at risk, as cashflowwill not have been provisioned for the new cost base. Advisors will also come under pressure on pricing as processes become longer across the board. Funders are takingmore time, property searches are takingmore time, and prospects are taking longer tomake decisions. All of this adds time to advisors’ work andwill lead to price increases. There is, however, opportunity.We will see greater moves into franchising fromemployed roles, particularly people in upper salary levels who are coming under increased financial pressure from fiscal rules. This will fuel certain sectors, especially higher-investment brands and management franchises. The continued post-Covid effect of peoplemoving for lifestyle reasons will also continue. Overall, it feels like we are at a relatively low point in the business cycle – something I have seen a few times before over 30-plus years. I think we still have a few years to go before things settle again, as we start to build fromhere. “I think we still have a few years to go before things settle again, as we start to build from here” 52 WHAT FRANCHISE Issue 21.2