From an industry perspective, the last 12 months have been largely positive for the franchise development and sales, although the industry has faced several strategic shifts. Strong consumer demand in some franchise sectors has been particularly strong, especially for business models that align with core services, technology and the booming health and wellness market. From a candidate perspective, we continue to see demand for concepts classified as recession-proof, always a safe harbor for first-time business owners.

A favorable credit environment, at least at the beginning of the year, helped many aspiring young entrepreneurs secure financing, which in turn fueled growth. Looking ahead to 2024, it is abundantly clear that the landscape has become even more competitive, as brands place an increased focus on differentiating themselves from others in an effort to attract quality candidates.

Related: How to maximize every stage of your franchise sales funnel using video

What worked in 2024?
Spurred on by an optimistic forecast in IFA's annual Economic Franchising Report, the industry explored some effective strategies and tactics that brought them closer and closer to their ideal candidates. Here are three specific examples:

• Targeted Digital Marketing – Franchise development teams are further leveraging social media platforms, personalized email campaigns and AI-driven marketing tools to target, reach and engage ideal candidates. Vastly improved targeted ad delivery allowed brands to zero in on prospects while improving lead generation and reducing acquisition costs
• Enhanced Franchise Support Programs – building on the franchise's long-term success, 2024 saw many franchise development teams strengthen support systems – everything from financial planning resources to advanced operational training. This increased investment should increase retention rates in the future
• DEI initiatives– in an effort to attract candidates from a more diverse pool, many franchisors expanded their efforts to reach underserved communities in 2024 – no doubt helped by updated SBA lending guidelines. This focus has opened many new doors and paths to build and nurture stronger franchises networking

Related: Diversity in the workplace: The benefits and why you need it

Where franchise development needs improvement
Now that we've reviewed the high points, it's time to focus on the areas that franchisees still need to improve in their efforts to meet their KPIs:

• Localized training – with the ever-increasing influx of international franchisees, brands will need to look more closely at ways to tailor training that matches the specific needs of local markets. These can often be highly nuanced, requiring an approach that takes into account regional business regulations, cultural preferences and consumer behavior – which is rarely one-size-fits-all.
• Transparency of Finances – limited by the limits of what franchisors provide in their FDDs (specifically point 19), many brands could do a better job with transparency of their finances. In the long run, this will create better confidence in the process
• Endurance – most franchise candidates – and consumers – now come from generations that value environmental consciousness. Brands should look to expand green building practices, incorporate more sustainability and integrate more environmentally friendly products and service offerings into their business models

Related: What is sustainability in business?

What to expect in 2025…
With the US election now decided, we have a clearer picture of what to expect for the franchise going forward in 2025. While nothing is completely certain, the following trends look like they could play a significant factor for teams of franchise development in the coming year:

• virtual reality (VR) – AI's twin augmented reality can become a huge asset to candidates engaged in the franchise discovery process. The ability to take virtual tours of franchise locations and corporate training facilities will help create a clearer picture and better meet expectations. Even for candidates in remote locations (again, think international), VR can be an innovative way to provide a much more immersive experience
• AI-driven customer support – this is an area that has already been seen quite widely, as chatbots can provide real support that once required a heavy staff component to manage. Enhanced with new features that take into account specific business needs, market conditions and performance metrics, franchisors will soon be able to make major improvements in sharing targeted recommendations for growth strategies, training and operational adjustments market specific
• Expansion of Micro-Franchises and Flexible Models – Many brands are already experimenting with micro-franchise models that allow franchisees to operate with lower costs and greatly reduced commitment. These new flexible business models should appeal to a wider demographic of candidates – especially young entrepreneurs and part-time owners. It is essentially an untapped market segment that shows a lot of promise for future growth

Related: How to create a winning strategic plan for 2025

About the Author
Rob Lance is a serial entrepreneur with nearly three decades of experience in the franchise industry, having served as a consultant, franchisor, franchisee, area developer and conference event manager. He is the creator of two iconic brands, BeTheBoss.com and Franchise Expo, and currently serves as Vice-President of Franchise Development for Stratus Building Solutions – an industry-leading three-level franchise opportunity for commercial green cleaning consistently ranked in the top percentile of Entrepreneur's Franchise 500.