Global Trends in Franchising

Financial services are undergoing a revolution, and franchising will provide a personal link between the huge financial service organisations and the service expectations of the emerging new rich and the established, well-heeled consumer. In the future, franchised mortgage broking networks will write over half of the world's mortgage business and more banks will have franchised branches and wealth managers to maintain and expand their networks and build better and deeper customer relationships.

As competition intensifies in each market segment, the top players will seek to establish market dominance by acquisition of competitors and customers to push growth past that which is provided by organic development. The competition for acquisitions will not just come from competitors. There are three other emerging trends that are driving franchise network growth.

One trend is emerging from downstream suppliers seeking to secure distribution and the more attractive margins and brand value as a product or service gets closer to the consumer. An attractive feature of a franchise network is that a franchisor can also be a supplier to the franchisee, creating a tied distribution network.

The second trend is the private equity and venture capital groups, who understand the value of branded networks. As more of this capital looks for a home, these groups will facilitate or participate in acquisitions and mergers of franchised networks, which will help to drive consolidation in the franchising marketplace.

The third trend is being driven by financial markets, which are thirsty for new IPOs. The private equity and venture capital groups will look to create liquidity in the assets they have secured and the Wall Street's of the world will continue to look for small cap floats among franchise brands that have eight-figure earnings and prospects for substantial growth on a national and international basis.