This is the prediction of franchising expert Richard Pakey who says this specialised business sector has remained incredibly resilient during this most challenging of years.
Even the most optimistic of us will readily agree that the year 2020 has been one of the toughest for businesses in recent history. Following on from the Brexit debate, which proved turbulent for many businesses, the majority of companies then had to face the Coronavirus pandemic head-on.
I write this as the Government impose a second national lockdown and it would be all too easy to ponder more doom and gloom for the business sector in the UK. However, despite all these problems, franchising has largely remained resilient and I predict it will continue to be a successful mode of business during 2021 and beyond.
Franchising is booming
Many employees have either been made redundant, or had their hours severely reduced, during the past eight to ten months. Even the fear of losing your job often creates an environment of uncertainty, when employees start to feel their immediate future is under threat and being controlled by outside forces. When this happens, many start to look at alternative options, such as self-employment and possibly franchising.
In the past, franchising has generally been overlooked by those who have been made redundant and are on the lookout for something new. But that appears to have changed in recent years. Franchising is now on the radar. The opportunity to be in charge of your own destiny is proving tempting for those who don’t want to face the prospect of losing their jobs all over again. And while there is no guarantee that every franchise will be successful, there is a general feeling that at least your future is in your own hands – rather than someone else’s.
Do research, find a franchise that fits in with your overall skillset, make sure the brand is solid, and then work hard to get it off the ground. With this approach, you are giving yourself every chance of succeeding in business. And franchising is definitely one of the best ways to invest capital into a business opportunity.
One of the most repeated phrases in franchising circles is: ‘The reasons some people become a franchisee is that they want to be in business for themselves, but not by themselves.’ It’s a well-used quote which perfectly sums up the advantages of setting up your own business as a franchisee.
Being smart when times are tough
Yet not all franchises are equal. Some products and services will be in demand regardless of the state of the economy. However, others will experience a significant drop in revenue as a result of a pandemic or any other sudden jolt to the business community. Some businesses may even be forced to close. It might sound obvious, but franchises which trade in basic necessities, such as food, have the best chance of developing and expanding in adverse economic conditions.
Franchises, such as restaurant chains and fast-food outlets, usually thrive, regardless of the target market. From basic takeaway grub, through to haute cuisine, food-related businesses have a strong chance of being successful. If the location is good, the outlet accessible and welcoming, and the food is prepared, packaged and distributed to a high standard, then you have every chance of cashing in.
Franchisors must react to a changing environment
And it’s not just franchisees which have to be receptive to change. Franchisors, too, must adapt their offerings to accommodate new trends, as well as trying to stay one step ahead of emerging competition. Franchisors must look at ways of making it easier to attract new franchisees to their brand. They may have to tweak long standing regulations, or offer inducements, introduce discounted franchise fees or even accept reduced royalties. Whatever it takes to ease new franchisees into their business model, during difficult times, needs to be done. It’s all about providing suitable and attractive incentives for their future business partners.
Final message
Hopefully, I have outlined some important points in this article. For potential franchisees, think carefully about what types of franchises will remain resilient during tough times. The market in some areas is more challenging than in others. Don’t forget to ask the franchisor how their business has fared during this most difficult of years. Dig deep to discover whether both the brand and the sector has reacted well to the challenging market conditions of 2020.
As for franchisors, remember that the market has changed dramatically for some sectors, as well as the attitudes of franchisees. Have you tweaked your business model to accommodate these changes? You may not need to do this immediately, but standing still is rarely beneficial for anyone. Good luck going forward.
