Carl Reader of d&t specialises in kids activities businesses and franchising.
Kids activities businesses have been hugely disrupted and some have responded by moving to an online model – via Zoom, Teachable, Kajabi, etc. Some have innovated by working together to offer reciprocal memberships – like a martial arts school and a gymnastics school collaborating so if you keep subscribing to your martial arts school then you also get gymnastics lessons as well and vice versa. It’s a practical way of adding value to the kids whilst keeping some income coming in.
Some martial arts schools are looking to commercialise this online test they’ve been forced into to see if they can build a model that has online classes alongside their face to face tuition in the future. With any kids tuition business, there is the challenge of appealing to students and parents simultaneously – maintaining the relationship with parents to reinforce why the kids should continue, and also keeping the kids engaged at an age when they might be too young to understand why they’re not going to the local hall for classes.
In the franchising sector, a worrying trend he is seeing is franchisors aggressively charging management service fees on franchisees – seeking to claim their percentage of everything. It is often said that franchising is being in business for yourself but not by yourself. Those franchisors living to those values are doing well and setting themselves up for the future nicely.
After every recession, franchising has boomed – often because people have lost their jobs and look for something else to do. So whilst the sector is relatively confident for the medium to long term, the short term is very challenging. Good franchisors are helping franchisees in negotiations with landlords, systemising ideas for franchisees to replicate across the network, and being a sounding board about grants, etc – almost taking a quasi advisory role with their franchisees.
His advice to franchisors is to be there for their franchisees – be the supportive big brother. You can worry about today’s profitability or you can focus on tomorrow’s franchisees. The important job for all franchisors is to make sure their franchisees stay in business.