Franchising is a winning but highly competitive model, forcing brands to be innovative. Illustrations.
Subscription system, external growth, penetration of smaller towns… Three years after the start of the health crisis, franchise networks are multiplying innovations to maintain their positions and, above all, stimulate growth. Thus, in September 2022, Del Arte pizzerias presented a disruptive commercial offer: a €35 monthly subscription for one dish a day. Philippe Jean, General Manager of the Italian restaurant franchise (Groupe Le Duff), makes no secret of the fact: the aim was to “create a buzz ” and generate traffic in his establishments. A successful bet. “95% of the first subscribers are new customers, and 90% of them are under 30,” he boasts.
Subscriptions: a significant growth driver
However, the question of the cost of the operation was quickly raised. Del Arte has calibrated an offer that may not be profitable,” confirms Grégoire Toulouse, partner at Taylor Wessing. But it will be able to change its pricing proposal or discontinue it. In any case, the franchise network will have demonstrated that it is at the cutting edge of innovation. Laurent Kruch strongly disagrees. “This type of low-end offer risks damaging the company’s brand image,” says the president of Karedas Consulting. Nevertheless, both experts agree on one thing: launching a subscription formula is a way of attracting new customers… and, above all, retaining them. “Subscription represents a significant growth driver, because once a customer has been ‘ferred’, they generate a recurring flow of money,” confirms Grégoire Toulouse.
France’s favorite sports retailer, Decathlon, has launched a trial balloon in Belgium, offering customers the chance to rent its equipment for a subscription fee of €20 to €80, depending on the value of the products. “With this offer, Decathlon is in line with its brand territory, which is to make sport accessible to all. And it’s part of a broader societal trend: that of reuse,” appreciates Laurent Kruch. But beware: a tempting commercial offer is not enough to attract shoppers over the long term. “It’s the franchise network as a whole that has to be dynamic and inventive to remain attractive. A tried-and-tested concept must constantly reinvent itself to ensure its survival in a competitive world”, analyzes Grégoire Toulouse.
Diversify
Because it was struggling to recapture its pre-health crisis attendance figures, franchisor Del Arte spent two years developing a hybrid concept comprising three separate dining areas. An imposing bar, called Cafferitivo; a classic restaurant with table service, Ristorante; and A Casa, for takeaway sales. A pilot plant recently opened in Joué-lès-Tours (Indre-et-Loire). “With this new format, we now cover all consumption moments, from breakfast to after-work,” says Philippe Jean, who hopes to appeal to young adults.
For its part, optician Atol has chosen to attack the hearing aid market. This diversification has come late compared with its competitors, notably Krys, which has just inaugurated its 200thstore dedicated to hearing care. For the launch of Atol Audition, the cooperative chain is building on its strengths: its reputation and brand image, as well as its outsider status. “Among our opticians, 20% offer multi-point of sale with a dedicated hearing area. This enables the hearing aid specialist to work in several outlets,” explains CEO Eric Plat.
In the ultra-competitive eyewear market, Atol also plays on the segmentation of its brands, with its Access and Style stores. Small formats with complementary positioning to cover dense catchment areas, adopting the “lily pad” strategy. “Rather than opening a large store opposite the local leader, we expand around it with several smaller units,” continues franchisor Eric Plat. It’s an excellent way of retaining franchisees,” admits Laurent Kruch. The most enterprising become multi-brand within the group, rather than looking for other brands outside.
Focus on external growth
To strengthen a franchise’s development, there’s nothing like relying on a tried-and-tested recipe: external growth. In other words, buy established brands to limit the risks involved in launching a new product. “Diversification of the brand portfolio, through creation or acquisition, also enables us to negotiate commercial leases from a position of strength vis-à-vis real estate companies,” emphasizes Laurent Kruch.
And why not leave the high-potential but highly competitive metropolises and set up in small towns? “In less densely populated areas, sales may be modest, but locations are cheaper, payroll is lower and there are fewer competitors,” points out the consultant. This is the strategy adopted by home furnishings chains such as But (320 units). “We are investing in towns of 10,000 inhabitants such as Thiers (Puy-de-Dôme) and Morteau (Doubs), where we opened outlets of varying sizes in December, the smallest being 1,200m2 “, explains Vincent Dosne, the brand’s Operations and Franchising Director.
Ten outlets have been set up by 2022, with a further nine due to open this year. “In order to make our small units profitable, we always stock the core range, i.e. the assortment of products that generate the most sales. Franchisees are then free to offer additional products adapted to the local customer profile”, he explains. The digitization of stores – via wi-fi terminals and tablets for sales staff – not only gives customers access to a wider range of goods, but also enables them to discover different sizes and colors. A virtual extension of the store.
