Creating a franchise Marvel would be proud of

Arabella Dalloz, Head of Leisure at CACI

First published in Propel, March 22 2024

Hospitality never ceases to inspire. Amidst a consistently challenging market, many entrepreneurs find ways to grow, creating jobs and providing new and exciting reasons for people to socialise. It’s not easy to do, but if expansion is on an operator’s mind, a great place to start – following the lead of some of the UK’s best brands – is to look at franchising.

Barely a day goes by when I don’t read Propel and see another brand looking to create or extend its franchising operation. It makes sense – locations throughout the UK are incorporating more F&B into their mix, so demand is high, and landlords are engaged. Since 2019, 59% of UK centres have upped their proportion of F&B, while only one asset class – leisure parks – has seen more of a decrease than an increase. Even that is marginal, and unsurprisingly these locations are giving more space to…leisure.

If after contemplation, franchise growth is a brand’s target, as it is for an ever-larger pool of operators, two things remain mission critical.

One is pretty obvious and we’ll get it out of the way: finding a trusted franchise partner. However, before operators even get there, doing homework and following a data-first approach is the best way to get the franchise expansion wheels turning.

Data and insight feed into every step of the franchising process, starting with location planning. This is of course a key step for any form of business expansion; businesses need to know that any given site has the right revenue potential, target demographic access, and a clear picture of what the competition looks like before committing. What makes franchising different, encouraging a more bespoke approach, is the nature of territories. We’ve worked with operators including Chopstix and Creams recently to inform franchise expansion and market evaluation.

Chopstix apply data to inform their franchise expansion, which they continue to drive successfully, and at great pace. What became clear from the modelling was the need to identify ‘trade zones’ – catchment areas capable of supporting at least one successful outlet. These are built using hundreds of data points, but ultimately it shows the spend potential and propensity within a reasonably assessed distance of the location.

Mapping out early on each potential ‘territory’ enables better decision making later, understanding how many and which ones can be feasibly combined into one franchise partner sign-up. Hitting the right amount of sites within the partner’s region of expertise, in the right places, prevents customer overlapping and the risk of internal competition, or for that matter competition with another ‘trade zone’. Something we’ve also helped Creams understand, and ultimately achieve.

Taking it a step further, it also provides the objective evidence base needed to make decisions in the modern world. A franchise partner will likely have a very strong idea of which locations will, and won’t, work. Quite often they’ll be right – their local knowledge is ultimately a big part of the decision to enter into an agreement with them – but the data gives all parties the vital tool for a better-informed decision.

Data in franchising can inspire confidence on both sides, with the franchisee able to see in black and white a well-defined opportunity, alongside the financial considerations: revenue potential for the trade zone, and a clear indication of how they could make it profitable. The main company gets to understand where the growth in market share is most likely to come from. When taking a business and putting it in the hands of another person, in a part of the country or world less familiar to its founders, an objective data-set creates an important level of reassurance for all parties involved.

We of course want 2024 to be a year of growth within hospitality, an opportunity to push the boundaries and take an exciting offer to people and places that haven’t yet had the chance to experience it. With the right tools, franchising will certainly play a vital role in that over the coming months and years.