The Coronavirus Effect on Franchising Your Business
The unprecedented times we are in dealing with this global pandemic create doubt, uncertainty and fear for everyone. Certainly, any business owner considering franchising a business or currently franchising their business is extremely focused on the effects that Coronavirus will have on their brand, business and overall franchise expansion model. Certain industries, geographic regions and other specific categories of business are hit hard in particular and many have had their expansion plans derailed due to the Coronavirus. Dine in restaurants, fitness models, retail and beauty have been forced to innovate to avoid complete closure and to maintain franchise viability. Businesses with a heavy concentration in markets like New York City have experienced even greater downturn due to Coronavirus.
With any downturn in economic trends, there are always opportunities to be found and the same is true here with COVID-19. As many brands have changed gears and adjusted business models for this unforeseen pandemic, the rate of innovation has increased exponentially. More and more businesses are finding ways to be creative, leverage technology and adapt to the current market. Fitness franchise brands are offering more virtual training programs and fitness regimens, restaurants are increasing their off-premise dining options and the percentage of their business is shifting away from dine in, beauty has gone virtual as well. Others are adding service lines and products that fit today’s consumer demand and offer value during a Coronavirus-driven marketplace. Great ideas are many times born out of necessity and a tough economic environment is many times when entrepreneurs creativity truly shines.
As the market is experiencing turmoil, many competitors in all business segments will close their doors, creating more opportunity to take market share and expand. The brands that make it through Coronavirus will benefit from decreased real estate costs, increased amounts of human capital and open market opportunities where others have failed. The amount of franchises offered on the market will decrease and the level of competitive “noise” lessens allowing the brands still pushing their franchise to get in front of more buyers and more opportunities. As the job market contracts, people who were once accustomed to safety in employment now will consider starting their own business and becoming an entrepreneur. Franchising is the gateway for entrepreneurship to many of these displaced working professionals who have never owned their own business before and appreciate the value inherent in a franchise model.
Certain industry segments are thriving during this downturn such as cleaning, restoration, sterilization services and healthcare. The irony of Coronavirus is that some market segments have seen drastic increases in demand and have actually produced record breaking numbers. A pizza franchise network recently released their best numbers in the brand’s 25 year history in the middle of Coronavirus due to increased delivery and take out traffic. A sterilization brand Franchise Marketing Systems works with has successfully added twenty new franchises in only two months during the downturn.
One element of the Coronavirus downturn that has also become evident is the sense of urgency. When times get difficult, as a business owner, you need to make decisions on a timeline. For many businesses, the consideration of whether to franchise has maybe lingered and now the need to diversify the business is urgent. Bottom line, if Coronavirus has impacted a business seriously, you need to do something differently moving forward. Maybe franchise development is part of that new strategy. For one, it would allow a business to diversify geographically and expand into more than one or two markets which prevents the serious liability of a single market catastrophe taking out the brand entirely (like New York). Second, franchising helps the business owner avoid the operational liability that comes with company owned growth, franchisees take on that burden and become the employer of record in their respective businesses. The risk of signing personal guarantees and investing in construction, equipment, etc is also offloaded to the franchisee.
In some cases, the time could be now to franchise your business. It takes bold leadership to consider expansion when many are running for the hills, but as the saying goes Fortune does Favor the Bold.
For more information on how to franchise your business, contact Chris Conner with Franchise Marketing Systems: