How shifting demographics are changing franchising

As society changes franchising must also adapt and change to accommodate the changing demographics.

In the words of Arthur Kemp, “Demographics is destiny”.

The demographic factors which drive change in the characteristics of our towns and cities and their inhabitants – economic, social, cultural – are, not surprisingly, also driving changes in franchising as they in all aspects of human endeavour.

Changing demographics offer both challenges and opportunities. Change is never easy and may be resisted – but it is ultimately inevitable for franchise systems which want to retain their relevance and viability.   

The world’s most iconic system – McDonald’s – provides an example. Until recently McDonald’s impressive development worldwide has been rolled out with refinements, but little significant change, to the  system developed in Southern California in the 1950s. It has been a belated recognition of changing demographics, and a response to competitors who had, which has led to significant menu changes.

The challenges of accommodating changing demographics are obvious but the opportunities are exciting and real.

The younger reader may find it difficult to believe that until the mid-1970s Australia had a white Australia policy. This drove the post war influx of Italian and Greek migrants who have contributed so much to our cultural diversity but it has nevertheless been the rejection of this policy which has seen Australia develop into arguably the most multicultural nation on earth.

Migrants – today primarily from Asian countries – make up a quarter of our population. In Sydney, our most multicultural city (and indeed possibly the world’s most multicultural city) 40 percent of its five million inhabitants come from overseas and more than 250 languages are spoken.

The opportunities for franchise systems which this massive cultural mix offers are reflected in the diversity of our franchise offerings.

Australia is the most franchised country in the world in terms of franchise systems per capita and this has been driven in part by the diversity of our consumers and the entrepreneurship of those whose migration to Australia has given us this diversity.

But demographics are about much more than simply cultural diversity.

Our population is ageing which provides real opportunities for aged care and health care. These demands can, and indeed are, being met by franchise systems which take advantage of this significantly changing demographic by providing commensurate services.

It is of course a corollary of an ageing population that we have a growing younger population. And this younger population demographic is also driving change, both in the opportunities for new business concepts and in the operation of franchise systems.

While the post war baby boomers start to think seriously about medical care and aged care, the Gen Xers,  the Gen Ys  and the Gen Zs are living a different dream and have quite different priorities which franchise systems can service.

Gen Z (those born between 1995 and 2009) are the first generation to have never experienced a pre-internet world. They comprise 20 percent of Australia’s population and, in the words of The McCrindle Blog, are “the first fully global generation, shaped in the 21st century, connected through digital devices, and engaged through social media”.

Gen Z – as with Gen Y Millenials before them and Gen Alpha which follow – offer distinct and different challenges and opportunities for franchise systems.

These extend beyond the particular business concepts developed to service these demographic groups and impact on the manner in which franchise systems accommodate prospective Gen X, Y and Z franchisees.

The formulaic uniformity which has served franchising so well for the baby boomer generation may require rethinking to allow a greater level of flexibility on the part of franchisees to accommodate the characteristics of the generations which follow for whom individualism seems to be a much more entrenched characteristic.