The 2024 Franchise Marketplace: Navigating Challenges and Seizing Opportunities

Multi-unit operators, the economy, and the franchise marketplace are all facing a number of challenges and opportunities as we head into 2024. Some forecast the economy will slow down, but franchisees can still find opportunities for growth. After all, multi-unit franchisees have the ability to create high-quality customer experiences and consumer value that independent businesses simply can’t match. 

We asked several members of the Multi-Unit Franchising Conference’s Board of Directors about their thoughts and how they plan to approach business in 2024. Robert Branca Jr. is president, general counsel, and director of development for Branded Management Group and Branded Realty Group, and he is a franchisee with Dunkin, RimTyme, and Interstate Battery. Rocco Fiorentino is president and CEO of Benetrends and a director and board member for Swiss Farm Stores and Saxbys Coffee.

For the first part in our series, here’s what these seasoned franchise veterans had to say.

What is your vision for the economy, the franchise marketplace, and your own business in 2024?

Branca: While we seem to be in unprecedented times, we have seen other economic cycles where things seemed different but each presented opportunities. The one thing that continued to deliver against these opportunities was sticking to the same simple fiscal disciplines that brought you to where you are. 

The math never changes. I actually reflected on this today upon hearing of the passing of Charlie Munger, Warren Buffet’s business partner. Munger was a man with a knack for distilling complex matters down to simple aphorisms that remained true decade after decade. 

Another constant is the waxing and waning of the regulatory state, which is in full wax mode right now. What is different now is that franchising is a loudly stated target of the government. This focus is not just on wrongdoing, but on the incredible business model itself. That is new and extremely troubling.

Fiorentino: My vision for the economy is that we certainly have challenges going into 2024. As they say, it's an election year. However, I see the opportunity for growth in the franchise space as independent businesses will continue to struggle with brand recognition, purchasing power, and advertising hurdles, leaving the market to the larger brands and the strength in numbers.

In what ways do you think this will impact multi-unit franchisees and their business operations in the coming year?

Branca: We will see continued consolidation, both of franchisors and franchisees, as those who can raise capital in these challenging times will take their share. Only more sophisticated players with greater resources and the ability to deal with the torrent of regulatory assaults on their businesses will be able to operate profitably. One hopes that they will become even more engaged in Washington and with their local governments through our excellent trade associations or on their own. Success in protecting the franchise model is critical.

Our Multi-Unit Franchising Conference has been the prime place to witness the growth of multi-unit franchisees. Every year, we see the goals that they set the year before be realized or exceeded. We have seen “umbrella” franchisors form and grow. Some are a collection of brands in the same sector while others span sectors, each trying to attract multi-unit franchisees to take up as many of the brands that they offer as possible. That certainly can facilitate expansion because you are dealing with the same players across all of the brands and often using the same franchise and territory agreements.

Fiorentino: Multi-unit franchisees will certainly have the upper hand in creating a customer experience and consumer value that independents will not be able to match.

What are some ways multi-unit franchisees can prepare their businesses for 2024?

Branca: Multi-unit franchisees can’t tell the future, but they can work hard to manage their risk. No one can eliminate risk and still grow returns, but you can hedge against interest rates, renegotiate leases and loan terms, form strategic alliances, and diversify and try to own your real estate if that fits in your wheelhouse.

I find it instructive to think of overall business planning like a casino: Players may all be gambling, but the house is just doing math. Continuously. Try to be the house.

Fiorentino: My thoughts are to hire and retain the best people and provide the best experience. Treat them as they are the best people and they can deliver the best experience. That wins the game every time!