The circular impacts of franchising, health and wealth

Franchising can get quite a bad rep when it comes to health. Most people will blame fast food for obesity if they can and there's no doubt that a lot of media focus on foods that are not great for us, finds franchises easy pickings.

But there are also many examples of franchises leading the way in promoting better health practices - and having a positive impact on people's lives and wellbeing.

A couple of recent articles by Liam Dann, an economist who writes for the NZ Herald, have focused on subjects that lean towards this viewpoint. Both articles require a Premium subscription to read.

One speculates on a new kind of medical health structure that could possibly take the weight off New Zealand's bealeagured public health system - a sort of public-private partnership that could be constructed to handle many of the more routine medical nursing procedures, based on the very successful example of the Caci Clinic franchise systems.

The other is a discussion of which of two major innovations currently racing through our society will be the first to have a major effect on the New Zealand economy - AI or GLP-1 weight-loss drugs. Ignoring AI's 'elephant in the room' question of whether any of us will have a life expectancy of more than 10 years ahead, it's a fascinating look at whether the productivity gains of AI will have more or less impact (and how quickly) than the social change effect the new drugs will have on consumers and health systems.

Liam says that in the US, where food companies like McDonald’s and PepsiCo have issued warnings about the drugs causing a big shift in consumer demand, analysts anticipate a 1% increase in US gross domestic product (GDP) based on improved productivity and cost savings related to health benefits. He also speculates that a shift in demand towards protein and fresh produce will benefit New Zealand's exporters.

Whether that is the case or not, the Ministry of Health says that New Zealand has the third-highest adult obesity rate in the OECD, and our rates continue to increase. One in three adult New Zealanders (over 15 years) is classified as obese, as is one in eight children (aged 2 to 14 years). If the new weight-loss drugs are taken up here at the same rate as they have been in the US (it is estimated that around 18% of the US adult population is already using them) and the same change in consumer demand for more protein and fresh produce occurs, then those businesses that are able to quickly pivot to providing these foods will be at the forefront.

New Zealand's love affair with heavily fat-saturated meals such as fish and chips, pizzas, pies and burgers needs to adapt. Adding to the salad-based offerings of franchises like Pita Pit, Soul Origin, Subway, and Katsubi, we are already seeing the growth in franchising of more asian-based food alternatives such as japanese (Sushi Sushi), vietnamese (Roll'd) and a wider range of fresh food items in the franchised cafes like The Coffee Club, Black & White Coffee Cartel, Gloria Jeans and Jamaica Blue.

In addition, and also helping counter the trend towards obesity, there are more and more franchise businesses that help kids get started in sports, or adults to continue with more age-appropriate forms of fitness exercise. And individual franchises are well placed to influence and assist healthy community habits by supporting local sports teams and health or fitness-focused events.

The franchise model is perfect for building nationwide networks of local businesses that can enable the spread of new and better consumption habits, and businesses that also have the potential to help the country's health leaders develop new, more efficient and effective systems for the delivery of health services.

If it is not complete coincidence, Liam Dann's choice to write these two articles in the same week points towards the potential for a franchised rollout of delivery of the new GLP-1 drugs (a new form of 'injectibles') which could take a substantial load from the overloaded health system. If just one result were a reduction in the 'epidemic' of obesity-related health issues it could take a lot of stress out of the health system and allow that to regain its balance, as well as improving the economic equilibrium.