Recruitment vs the economy – what’s going on?
As a membership association part of our job is spending time talking to our members about their businesses and sometimes, during these conversations, we pick up ‘golden threads’ that run through more than one conversation.
One such thread is that some franchisors are receiving plenty of enquiries from potential franchisees, but that they get ‘cold feet’ further down the recruitment line, saying they are ‘waiting to see what the economy is going to do.’
For many franchisors this is frustrating because it doesn’t reflect how well their actual franchisees are doing, delivering their services day in, day out across the country, with full orderbooks and in some cases demand for their services at an all-time high.
Is it purely sensationalist press reports of a potential recession that are causing this reaction or is it something else?
We reached out to a few of our members to find out their thoughts and experiences:
Bright and Beautiful – Journey of due diligence extended
Emma Higgins, recruitment manager for cleaning franchise Bright and Beautiful told us: “We have lots of enquiries coming to Bright & Beautiful, this has not slowed down at all. I believe that a lot of people want more control of their own income with the scare mongering in the press in terms of the economy. We have noticed that the journey of due diligence has been extended for our prospective franchisees, but if anything, this is great as we can work with them further in the business planning stages and introduce them to more existing franchisees. There have been quite a few prospects this year who decided to not proceed or “ghosted” at the last minute, but they know the door is open to them if they want to re-investigate. In the past two years, we have had franchise business owners join the network who we spoke to five, seven, 10 years ago! It must be the right time for everyone, and economic considerations are just one of many that prospects look at, including family life, outgoings, dependants etc.
We asked Emma if the press reports about the UK economy were reflected in her franchisee’s figures?
Emma replied: “It is “business as usual” for our franchise business owners, if anything, they have more enquiries now than ever before. This year alone our enquiries are exponentially up on last year’s. We can see that our network revenue has increased over 30% YOY (2021 to 2022) which does not track with the sensational headlines stating that there is less public spending due to financial concerns. Our business owners feel comforted to know that our model, and the industry itself, is recession and pandemic-proof.”
Children Inspired by Yoga (Tatty Bumpkin) – overwhelmed by demand for classes but not enough franchisees to run them
Sam Petter, founder of Children Inspired by Yoga (Tatty Bumpkin), who recently signed an agreement to expand her brand into India agrees: “I have bookings for our classes coming out of my ears, we’ve even had to start running some territories ourselves, simply to satisfy demand for our classes, but people are nervous to commit, and they really shouldn’t be; the business is there just waiting for them to pick it up and run with it.” Sam also wonders if post Covid, so many people have been offered flexible working from their traditionally office-based employers that it isn’t unique to franchising anymore and that the industry might need to change it’s messaging from flexible working to building skills and a business?
Agency Express – the wrong kind of prospect
Ben Brookes, MD of Agency Express has another theory: “We’ve had this happen to us a couple of times recently, but I don’t put it down to nervousness surrounding the economy, I think it is more that the person was looking for a ‘job’ with a salary rather than someone looking to change their life and become self-employed, and there’s a very big difference.”
He continued: “Economically uncertain times make people nervous, they pull up the drawbridge and stay in their jobs where they know a salary, no matter how small, will be coming in every month. Some of the people coming to us recently have been those who, with the cost of their mortgage and the cost of living going up, are finding their salary isn’t enough to live on, so they are looking to ‘buy’ their way out of that situation. Even with a good resale franchise we can’t guarantee them an income, so a franchise really isn’t for them at this point. We are looking for courageous people with the bravery to run their own business and the belief in themselves to make it work rather than those who simply want a job with a salary.”
Successfully recruiting
It must be pointed out that this isn’t the story across the board by any means. Many BFA members are having enormous success with their recruiting, including The Cat Butler and EasyStorage, Razzamataz and Mathnasium to name but a few.
Franchisors must be adaptable to succeed
Emily Price, COO, BFA Academy said: “Economic circumstances have certainly shifted the minds of franchisee investors. There is no doubt that the entrepreneurial spirit and appetite for building a business is still alive and kicking however, due diligence, including waiting for the ‘right time’ has impacted conversion rates significantly. Buyer behaviours are changing and the franchisors with a combination of consistent focus on marketing and adaptability in their strategies, will likely see increased successes longer term. Franchise businesses remain a force for good in business, with proven models, collective networks and franchisor support strengthening the chances of success.”
The Future for franchise recruitment
So, what does the future hold for recruitment for franchise brands? With interest rates still high and, although dropping slightly, unlikely to change significantly in the short term, although many will be hoping the Bank of England will drop their base rate on 21st September 2023, will it be enough to tempt ‘cold footers’ back to the franchise table or was that never the issue in the first place?
We’d love to hear your thoughts on the topic, has your franchise experienced this type of behaviour, citing the economy as a reason for pulling out last minute? Or do you put it down to another reason not discussed above? Whatever it is, we’d love to hear from you [email protected].
