Even the most optimistic of us will accept that this year has had its challenges. Coming off the back of the Brexit debate and the turmoil that followed, there was a once-in-a-lifetime Pandemic piggy-backing on the tail-end of it. Even as this article was being written a second national lockdown is being enforced. So, it would be too easy to be thinking that it is all doom and gloom. However, franchising has been, in most parts, surprisingly resilient against most of these challenges. The prediction is that it will continue to do so in 2021 and beyond, and this article will show you why.
Franchising Is Currently Booming during 2020
Many employees have either been displaced or made redundant during 2020. Even the fear of this creates an environment whereby a sense of fight or flight response is considered. This often unflappable group would never even consider anything other than employment. But, situations often outside of their control will encourage them to look at alternative options. Such as self-employment. This is where franchising comes into its own, where ‘franchising’ in general has been overlooked in the past. Often purely because of the incorrect thought process that is maybe reserved for people or companies rather than ex-employees.
Franchising, now on the radar, could be the difference between being made redundant again or instead, being in charge of your own destiny. Whilst it is not really a fair reflection to say that a franchisee cannot lose their own franchise, or the franchise will not suffer in a poor economy, franchising has proven over many decades one of the best ways of investing capital into a business opportunity.
It is often repeated in franchising circles that one reason some people want to enter the world of franchising as a franchisee is that they want to be in business for themselves, but not by themselves. Many consultants will remark that this is a common quote by individuals when speaking to them, it is a welcome thought too as that does show that the intention is there!
Mass Unemployment Will Fuel Franchising
All franchises are not equal, some products and services that are going to be purchased and sold regardless of an economic shock. For balance, there will also be others that will see significant revenue drops which may force their closure.
Some great examples of franchise opportunities that can grow in adverse economic situations are ones that provide our basic necessities, like food.
We all need food to survive don’t we?! And we now live in such a diverse world that we now crave options that decades ago were not considered to be basic at all. This is where franchises that are restaurant formats or fast-food, even luxury food type franchises can thrive, because we all still need to eat. We will still go about our daily lives as best we can, and maybe what we once considered more of a luxury impulse food purchase becomes the new normal.
Franchisors Are Receptive To A Changing Environment
Some franchisors too are starting to adapt their offering to 2021 thinking. Now, more than ever, looking at how they can make it easier to attract new franchisees to fund their future growth. Helping them to become more resilient. Often rewarding early adopters or being even more creative in how the franchisee can buy-in. Offering to help them build something that is even more repeatable and scale-able than franchising would ever have been before. It’s the franchisors that have spent 2020 ‘pivoting’ or adapting that are now seeing the benefit of making those changes. This will continue in 2021 whilst others potentially have to play catch-up. But in doing so will make their franchise offering less appealing, at least in the short to medium term as others mop-up what they have left off the table.
A Message To Potential Franchisees And Franchisors
So, there are some very clear messages in this article that I hope you take away. Firstly, if you are a potential franchisee, think about what type of franchise you feel might be more resilient given that the market in some areas is more challenging than others. Ask questions to the franchisor about how they have reacted to the economy this year, dig deeper to see if you believe your choice has been well thought out or reactive and whether you believe you can be part of it now.
For franchisors, the market has changed, franchisee attitudes are changing, some of you have been under constant pressure this year, but have you changed your model? You might not need to, but standing still is rarely beneficial for anyone!
Richard Pakey is a franchising expert and Regional Director for the award-winning Lime Licensing Group and can be contacted in the following ways:
Email: [email protected]
Mobile/text/whatsapp: 07904 697591