Top Selling Periods for Franchised Businesses

A business with consistent sales throughout the year is, more often than not, a more stable operation than one that relies on a couple of key months for the bulk of their profits. Consistent sales make it easier to plan, staff and budget. Costs are frequently lower and profit margins may be higher, partially due to reduced discounting. Nevertheless, certain times of the year remain important selling periods. These annual events represent periods when the consumer is more likely to purchase certain products or services. A prudent business operation needs to cater to these patterns. FranchiseFacts’ National Franchisee Survey has taken the first step at measuring the impact of key selling periods by asking survey respondents to identify those major holidays and events that have a positive impact on their business.

Major media reports sales revenues for large retail chains and, from this, we have come to understand the importance of the Thanksgiving to Christmas period to these larger retailers. For other businesses, however, this same period often represents a dramatic slowdown in sales.

Survey respondents are presented with a list of holidays and major events, and asked to select those items in the list which have a noticeable positive impact on their business. This list includes major sports and holidays, plus key spending periods such as weddings, moving and back to school.

Respondents report Christmas (18%) as being THE most important sales period, followed by Valentines Day (13%) and Mothers Day (13%). While these top sales periods may not come as a surprise to many, what we find surprising is that so few of the respondents identified these periods as having a positive impact on their business.

A second tier of important sales periods includes Easter (9%), Back to School (9%), Weddings (8%), Moving/Relocation (5%) and Halloween (5%).

The bottom tier of important sales periods includes major sports, Thanksgiving and Fathers Day which all received fewer than 5% of responses.

These percentages are likely to vary by industry, region of the country and also specific local events. A region hosting the NFL’s Super Bowl, for example, is likely to see a significant influx of visitors and spending in many sectors of the local economy. Likewise, homeowners in New England are more likely to decorate their homes and host parties for Halloween, making this holiday more important to sectors of their local economy. Businesses providing products to support Halloween events (parties, food, costumes, decorations, etc.) are likely to transact a much greater portion of their business during this period.

While Christmas does represent an important selling period for many in franchising, this group represents less than 20% of responses to this question. Perhaps the franchising industry, which is primarily comprised of small businesses, have a more balanced business model where revenues are more evenly spread out throughout the year. Alternatively, it may simply be that major holidays and events are less important to businesses than in prior years.

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Perry Shoom, FranchiseFacts
Capturing the franchise experience!

Franchisee Survey in progress at www.FranchiseFactsUSA.com
If you are a franchise owner or store manager, please participate!

Follow our Blog at franchisefactsusa.blogspot.com

Franchisee Satisfaction Indicators Suggest Contraction in Franchising

We believe that it may be possible to predict, or change, future events by understanding franchisee satisfaction and its impact.  This is contrary to the more typical utilization of franchisee satisfaction as a current or historical indicator.  To aid in this, we have incorporated what we feel are leading indicators into our National Franchisee Survey and our satisfaction index.  Through this index, we hope to be able to identify those franchises primed for growth.

Future success for most franchisors is dependent on the renewal of existing franchises and the sale of  new franchises.  Current franchisees play an important role in this process.  In addition to royalties or other payments to the franchisor, franchisees also serve as referral agents that impact on new sales.  The thoughts and intentions of current franchisees is crucial intelligence for a franchisor that can aid in building their franchise network.  The accompanying table presents three leading indicators.  All are part of the National Franchisee Survey and incorporated into the index that will be a part of our Annual Report at the end of this year.

What we see is troubling.  By a wide margin, surveyed franchisees report that they would not provide a positive referral to a prospective franchisee.  They also report that they would not have invested in their current franchise had they known what they now know.  Since overall numbers can hide crucial differences such as those between newer and older franchisees, we also look at this indicator based on years in operation.  We find similar results regardless of how long a franchisee has owned the business.  This suggests that current concerns have existed for an extended period of time.

When asked about future plans, only 15% of respondents anticipate doing the same thing in five years.  While only 14% anticipate retirement, 70% anticipate either owning a different business or being an employee for another business. 

Should these patterns persist, many franchises will encounter significant challenges in the coming years.  At the very least, a very large number of new franchisees will be needed to maintain the current infrastructure and revenues.  These new franchisees will be harder to find if current franchisees are not prepared to provide positive referrals.  Some franchisors may choose to ignore these trends and could very well see a decline in their franchise network.

More enlightened franchisors will look inward to determine if the patterns we have identified are reflected within their network.  Should these patterns be confirmed and reversed, short term benefits would likely include a reduction in costly internal litigation.  Longer term trends would include a larger and growing franchise network plus a growing dominance within their respective industries.

One of the goals of the National Franchisee Survey is to identify many of the reasons for franchisee dissatisfaction within a franchise network.  This is, as we see it, the first step to reversing negative trends within the industry.

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FranchiseFacts – Capturing the franchise experience

Perry Shoom, FranchiseFacts
Capturing the franchise experience!

Franchisee Survey in progress at www.FranchiseFactsUSA.com
If you are a franchise owner or store manager, please participate!

Understanding the Franchise Experience blog can be found at franchisefactsusa.blogspot.com