By Grant Bullington, FranNet
FranNet consultant Grant Bullington explores what prospective franchisees can expect in 2022, how franchising has adapted to the “new normal,” and his advice for getting started in franchising in the new year.
Now that we’re moving into a post-COVID-19 world, what effects of the pandemic do you see playing out in the franchising industry? How has the pandemic changed things?
As things slowly continue to return to normal, confidence will continue to ratchet up. Part of the confidence is how we’re internally processing the overall risk of starting a business. Doing so in the midst of the pandemic was generally reserved for the bolder investors. The thought of looking at opening a business now at some point in 2022 seems far less scary or ridiculous now when compared to the same thought in 2020 or 2021.
Part of the confidence comes from the fact that we now have access to more data and history on how certain business categories performed in the previous year or more. Today’s prospective franchisee can make their decision by relying on hard evidence, which offsets the need to decide based on mostly forward-looking speculation (or guessing and hoping how they think things might unfold).
Another aspect is that banks are lending again for start-up franchises. Not only does this allow you to invest in a business with more than your own investment dollars, but enhances the overall confidence that our rather conservative banking institutions are once again seeing the positive opportunities in the franchise industry.
The pandemic has seen most people pause and reflect on their personal and professional lives—their goals, family, lifestyle, and financial objectives. For a lot of folks, it served like a wake-up call that change is in order. When it comes to careers, we’re seeing a big trend of people who are employed, or highly employable and in transition, that are redesigning their plans and looking for a business to be a better vehicle to get them to their adjusted plans (and enjoying the journey too).
We’re not seeing the same surge of interest in franchising and business ownership that occurred during the Great Recession starting in late 2008. Back then, people invested in franchises to meet a need—a need to get back to making money and to look at business ownership thanks to the lack of employment opportunities. Nor are we seeing the “great resignation” play out with the same trends as in the U.S. Instead, we’re seeing a rise in people taking control of their careers and feeling confident to seriously consider franchising to meet a desire to live a different and better life than they were prior to COVID-19.
While we’re not yet “out of” the pandemic, we’ve passed some major milestones: vaccination numbers are up, and are helping to stamp out the risks and reintroducing some sort of normalcy. We have some confidence in how things are playing out as the “new normal” becomes increasingly stable. In many cases, the ramifications weren’t as extreme as once thought, or the future looks brighter than expected. And for the areas that were seriously impacted and continue to struggle, we now have the clarity as to what industries to avoid (for now).
Why is franchising the right choice right now for entrepreneurs looking to start their own business?
One of the reasons that I like the franchise industry so much is that new owners can start a business built on a solid foundation of systems and operational infrastructure. Franchisees and franchisors have made millions of mistakes already and you don’t have to repeat any of them! Organizations—including franchise systems—that manage to endure challenging times tend to emerge better: more robust, more resilient, and poised to thrive. If you pick the right franchisor, you can benefit from this lift.
These organizations are also better positioned for future crises, having been forged in fire. Franchising provides a far safer starting point for business ownership. By partnering up with an organization that has a history and track record of success, prospective franchisees benefit by eliminating the risk associated with starting something up from scratch where there are just so many unknowns. There are many different industries and categories where you can find franchising.
What advice do you have for prospective franchisees who are considering getting started now?
In today’s terms, I would suggest the same advice as I have always given out. Expect that there are some areas that deserve additional consideration in your research. You want to develop a comprehensive and clear plan of what you’re looking to do. Firming your investment budget and threshold is always important to know before you start researching opportunities.
Next, take an inventory of your transferrable skills—what are you good at? But keep in mind, just because you’re good at it doesn’t mean you have to keep doing it! Take the time to design your ideal “job description” as an owner, with an emphasis on the talents you really enjoy deploying and the roles that bring you the most satisfaction.
This exercise will help reveal several criteria and elements that are significant in your decision making. Your significant elements will be unique to you, and it’s important to hold out for a business that delivers in these areas. For example, you might be drawn to businesses that help people out, or allow you to contribute to your employee’s professional growth. Or you might want to build an empire. It’s important to take the time to crystalize what a business needs to deliver to you.
Many people made changes to how they live their lives during the pandemic, including where they work, what they want to do for work, new pastimes, or even where they live. You might have, too, and it’s important to have clarity about your new or recalibrated objectives to ensure that the business you seek delivers in these critical areas.
There are certainly areas of research that demand more attention and consideration. A big one is to understand how the industry or sector was impacted by COVID and the market going forward. If the industry was negatively impacted, is it bouncing back or staying down? If it’s recovering significantly, are there indicators of sustained future growth, or is it a short-term bounce back? Thankfully you’ll have a direct line to the information to get the inside industry perspective from existing franchisees when you conduct your validation. I can’t think of a more honest and reliable source to gather the facts to make an informed decision.
Franchising is more than blindly following rules. Most franchisors are interested in the strengths and talents that franchisees will bring to the organization. You can certainly find businesses where your function in the business provides a great deal of meaningful engagement and satisfaction. Don’t get discouraged if you don’t feel drawn to opportunities you uncover on your first foray—there are more than 1,300 to choose from across the country!
Grant Bullinton is a Vancouver-based franchise consultant with FranNet. He works one-on-one with serious prospective franchisees to find and research their ideal franchise opportunity. FranNet’s services are no-cost to clients. He has more than 15 years of franchise and franchise development experience.