How Covid-19 Has Seen Franchising Become More Resilient Than Ever Before
🕒: Three minutes
With hundreds of countries being forced into lockdown and the majority of people being either forced to work from home or made redundant, it’s safe to safe that very few have benefited from the Covid-19 pandemic.
Only now are countries beginning to emerge from the lockdowns brought on by the viral crisis, the global and economic impact of which will linger on for the months and years to come. The majority of companies will struggle to regain the momentum and revenue they had prior to the Covid-19 outbreak, while others will, unfortunately, never open their doors to the public again.
However, this isn’t the case for all businesses. There are some who have managed not only to survive the pandemic, but actually thrive during it. The franchise industry is one of the very few to have actually seen a surge during the crisis with many entrepreneurs deciding to look towards franchising as a way to find financial success during this difficult time.
The Coming Boom
In a recent editorial, Mark Siebert, CEO of the iFranchise Group, said; “Franchise companies better be prepared for the coming boom in franchise sales, or they are likely going to miss out on a once-in-a-lifetime opportunity. When certain factors are in place, franchise sales tend to climb.” He describes those three primary drivers as:
- High levels of unemployment at the top end of the salary market
- Ready access to debt capital at historically low interest rates
- After more than a decade of growth since the last recession, many Americans have access to substantial savings in the form of home equity, retirement accounts, and personal savings
The unfortunate truth is the current pandemic has put more people out of work in a short time than ever before in our nation’s history. Many of those people are highly competent in their industries or have excellent business skills, creating a well-qualified labor pool of prospective franchisees or potential employees for those prospective franchisees.
The Franchise Model
Unlike independent companies, franchises are resilient business models that are more likely to weather the storm through recessions. Given the difficult economic circumstances, now perhaps more than ever is the best time to invest in a franchise for a number of reasons:
- Established brand - A franchise has the benefit of built-in name recognition and an already existing loyal customer base, giving you solid ground to build up from. This base, along with heightened brand awareness, can sustain your business throughout harsher economic climates.
- Low risk - Banks are more willing to lend and support franchises that have a proven record of success and stable financial histories, making them a low-risk investment. Smaller businesses and independent operations can be financially risky, even in stable economies, and many are likely to go under within two years of opening.
- Support & Collaboration - By investing in a franchise, you have access to a wealth of resources and knowledge from fellow franchise owners and managers. From setting up your own store to branding and marketing, you don’t need to worry about doing it all on your own as you have experienced guidance from those who have already been through the same process and can offer you top-level training and expertise.
- Financial Aid - Many franchises offer financial support to their new franchisees, whether it be directly or through third-parties, making the process of opening up a new business a lot easier. Start-up costs for a franchise will be significantly less than if you were to open an independent business.
Whether you start fresh or buy out another franchisee, your chances of success are much better with a franchise than if you were to go it alone. Franchising contributes greatly to the US economy while offering a proven business model.
As you decide your next career steps during this time, know that franchising lets you make your own daily decisions with guidance from a franchisor that been through it before when you need it.
The economic challenges presented by the pandemic could very well make franchising a wise choice for your entrepreneurial goals.