Global Franchise 10.3

Why premium franchising is a local game Word of mouth Mindbody’s 2025 report on the luxury fitness and wellness sector highlights word of mouth as the “second most powerful acquisition tool after Instagram by 46% of operators.” Brand champions Where quality personal interactions are integral to success, having committed brand champions “on the ground” is invaluable. Local heroes When selecting franchisees, BoConcept looks specifically for “local heroes” – individuals with strong local knowledge and a long-term perspective. Exceptional service As BoConcept’s Lars Hovang notes, “Process is important, but people are key to success.” In premium franchising, flawless delivery depends on local operators who can translate brand standards into consistently high-quality, human experiences. Partner selection Fernando López de Castilla Elías observes that control “depends entirely on the franchisee profile.” Premium systems succeedwhen franchisors choose partners with local credibility and a long-termmindset, rather than relying on rigid oversight alone. Finding the right cultural fit is essential for both franchisor and franchisee, and how the dynamic between head office and investor will impact brand control is something to consider early in the recruitment process. “Control depends entirely on the franchisee profile,” explains Fernando López de Castilla Elías. “A multi-unit operator, a multi- brand operator, or an ultra-high- net-worth individual all change the power dynamics. It is not about enforcing more control. It is about choosing the right partner in each market.” Regarding BoConcept’s typical franchisee, SvenWallén has found that this investment is often the third step in someone’s career. When awarding franchises, the BoConcept team considers people skills a critical third prong in potential investors’ capabilities, after technical skills and management. “Understanding the customer’s needs comes before selling a product. This requires a mentality shift for franchisees. They must respect the professional pride of their teams and deliver genuine service. This applies to many high- end or luxury franchises. Think of dentists or cosmetic services: these are people-oriented sectors where franchising can work very well.” Luxury, resilience, and growth Between 2019 and 2023 luxury brands, achieving rapid growth and unprecedented demand, outperformed global markets. Although growth has since slowed, personal luxury goods continue to perform well compared to other sectors, and the luxury client base has become both more diverse and more interested in luxury experiences. The fitness and wellness sector offers particular resilience. Mindbody’s 2025 State of the Industry Report notes that “Within the [wellness] industry, optimism seems tied to a long-term cultural shift: consumers now treat fitness and wellness less as a luxury and more as a lifestyle priority.” The report also indicates that in the face of concerns of recession, consumers remain committed to wellness. Clients favor ongoing relationships rather than one-off services, and 56% of respondents mentioned personalized outreach as a top retention strategy. The IFA reports that personal services – including wellness – and retail food, products, and services continue to thrive – and these are the businesses most likely to yield ultra-premium brands suited to franchising. “We have seen strong demand for high-end premium properties over the last three years, and our offices have grown rapidly during this period. Customers in a strong financial position see opportunities and invest even in a weak market. The decision process takes longer, and customers look more into the details, but that is healthy and fits our quality offering well,” reports Fantastic Frank’s SvenWallén. Stephen Smith digs deeper into how the wellness sector exhibits resilience during uncertain economic times. “When conditions tighten, customers become more discerning. In the health club industry, people usually leave for one reason – they’re not using the facility enough. That puts the responsibility on the franchisee to keep members engaged, happy, and coming in regularly. The more your customers are actually using the studio, the stronger your performance will be, regardless of the broader economy.” Consumers increasingly see wellness as an essential part of modern life and look for day-to- day luxury, which bodes well for the ongoing success of ultra- premium brands when economies are performing strongly. But these models offer resilience during leaner periods too. As Rafael Ramsa observes, “In tough times, people want comfort, and self- indulgence is hard to give up.” Fantastic Frank, Lisbon Photographer: Simão Pernas 75 GLOBAL-FRANCHISE.COM Ins ight