Cover StoryJanuary/February 2021

The Resilience of Franchising

Strong franchise systems provide increased support to withstand the challenges of 2021

By Lauren Huneault

In the wake of the COVID-19 pandemic, more Canadians are looking to battle job uncertainties by taking control of their own employment destinies. Starting your own business may ensure that you direct your own fate, but it still presents its own challenges as you look to navigate the world of small business ownership alone.

That’s where franchising comes in. As a franchisee, you’re in business for yourself, but not by yourself, with the support and established systems of the franchise brand behind you. And, while it may seem like the uncertainty of this time is a roadblock for franchising success, experts in the industry suggest that with the right franchise team behind you, 2021 can be the perfect time to make your business ownership dreams come true through franchising.

Blueprint for success

John Prittie, president and CEO of TWO MEN AND A TRUCK Canada, says franchising offers entrepreneurial Canadians a blueprint for success. “When a prospective franchisee invests in a franchise system, whose product or service has proven to meet the needs or demands of the marketplace, they have positioned themselves for success,” Prittie explains. “It has been well-documented that the rate of failure of a new franchisee inside a franchise system is significantly reduced versus starting a business as an entrepreneur from scratch.”

John Prittie, TWO MEN AND A TRUCK canada

Franchises find this success through economies of scale, says Ian Walsh, senior vice president of marketing at FranConnect, a provider of franchise management software. “Franchising allows you to scale a business faster and more efficiently. Rather than having to build, open, and operate every location on your own, you bring on partners, called franchisees, who provide the capital, staffing, and day-to-day management and growth of the locally owned business.”

Another reason why franchisees find success is through the system that saves them from making time-consuming or costly mistakes. “With a franchise, you immediately deploy your talents and efforts with their systems and simply get down to business without delay,” says Grant Bullington, franchise specialist for Western Canada at FranNet Canada. “Building your own business is going to require extensive planning, prototyping, and a lot of trial and error (mistakes). These mistakes are costly, in terms of both time and money. The franchisor has already made 2.1 million mistakes. By joining their system, you don’t have to repeat any of them!”

“The major reason for the high success rate of the franchise business model is the collective knowledge and experience that moves everyone in that franchise concept in a positive and profitable business direction,” adds Dan Hopkins, director of franchise development, Canada, at Paul Davis Restoration Canada. “Pooling purchasing power, marketing together to advertise a consistent message, and consistency in providing a quality customer experience are significant advantages that franchise business concepts have over independent businesses that offer the same product or service.”

The time for franchising is now

The experts agree that franchising is a strong option for those considering starting a business, but is it really a good idea right now, in this time of economic uncertainty? The answer is a resounding, “yes!”

Ian Walsh, FranConnect

Prittie says franchise systems have the infrastructure in place to come up with solutions to any difficulties, such as those brought on by the unprecedented challenges of the COVID-19 pandemic.

“Franchisors have professional management teams to support franchisees during good and bad economic times. Management team members are subject matter experts in sales, marketing, promotion, administration, leasing, financing, HR, and technology. In the current economic climate, their advice and guidance are invaluable. These experts are very resourceful and help franchisees capitalize on new opportunities or solve critical issues. It’s nice to have someone watching your back!”

Hopkins agrees that franchising’s strength in numbers makes it an even better option in difficult times. “As each franchise brand adapts to operating their business concept in the COVID-19 environment and beyond, you as a franchisee will benefit from the collective knowledge that will come from that learning. Your franchise family wants to see you succeed because it strengthens the brand’s overall reputation and the value of each franchise location.”

Bullington notes that many franchisors have already faced economic crises and come out on the other side. “2020 has become quite the testing ground for a lot of businesses and unfortunately a lot of businesses won’t survive. For many franchisors, this is not their first crisis. Having survived previous ones – the Dot Com crash, 9/11, 2008 recession (and let’s not forget Y2K) – a franchise system grows stronger and more resilient. It doesn’t mean they get to sidestep the COVID economic crisis, but they are far better equipped to survive (and thrive).”

“As an independent business owner, you have to constantly find solutions to your problems like a perpetual game of Whack-A-Mole,” he adds. “Franchised businesses aren’t immune to problems and challenges. A big difference is the number of resources a franchisor can put behind the solutions on behalf of its franchisees.”

The outlook for 2021

Franchises are in a better position to weather economic storms like COVID-19. With that in mind, the outlook for 2021, while still somewhat uncertain, is altogether positive.

Grant Bullington, FranNet Canada

“Throughout the pandemic, we have seen that most well-run franchises have been able to pivot and tune their operations to survive and, in some cases, thrive. In 2021, we’re likely to see expanded winter shutdowns, but this time businesses will be much better prepared to respond — unlike in spring 2020 when the sudden shutdowns came as a surprise, leaving many business owners scrambling to figure out how to continue to generate revenue,” says Walsh.

“Coming into spring 2021, likely with the tailwind of a vaccine rollout, we foresee the beginning of a very strong run for franchise businesses. We anticipate they’ll simultaneously benefit from strong consumer spending and renewed interest in franchising, helping to accelerate franchise development and boost brand awareness.”

Bullington also expects that franchising will rebound in 2021, but notes that some franchises will fare better than others. “I predict that franchising will recover to pre-2020 numbers. But it won’t be flat across the board. Some categories will struggle while others are lifted. And within those categories, there will be some franchise systems that thrive while their direct [franchisor] competitors flounder,” he explains. “Franchisors will see lower overall volumes of inquiries, but some will have similar, or perhaps greater numbers of truly qualified prospects.”

Hopkins says key learnings from the past year, coupled with increased interest from prospective franchisees, will lead to growth in the coming year. “I expect the Canadian franchise industry to be stronger in 2021 than in the past three years. Franchisors will have strengthened the financial awareness of their franchisees to understand how to better manage the financial performance of their business models.”

“And secondly, because of the adverse collateral effects of the COVID-19 pandemic, more people will look to control their own destinies by owning their own business rather than leaving their family’s financial fate up to their employers. Having no say in what happens to you when a specific industry or the overall marketplace faces challenging times will motivate people to start their own businesses and control their own fates,” adds Hopkins.  

Advice for the future of franchising

For those considering franchising, the biggest piece of advice from the experts is to not be afraid to get started in 2021, while the timing is right.

Dan Hopkins, Paul Davis Restoration

Bullington says the first step is to overcome your fear of the unknown by doing your proper research and due diligence. “Don’t let fear hold you back from looking. You can help calm your fears by committing to a grounded, fact-based, and data-driven approach. Prepare yourself in advance for the pending fear and anxiety and take solace in the idea that knowledge will eventually offset the fears. Use your fear to fuel research.”

“Now is a great time to get started with owning a franchise business,” explains Hopkins. “Interest rates are at an all-time low and will be for a couple of years, there will be a focus from government programs to help small businesses get started, and the general public is ready to support small businesses after a long shut-in period needed to combat the COVID-19 pandemic.”

Walsh echoes these sentiments but notes that it’s important to stay up to date on changes that are underway in the world of business. “This is a great time to look at becoming a franchisee. As in any other time, you’ll want to make sure you have enough working capital to get you through your ramp-up period. But, more than ever, do your homework on all fronts. There are changes underfoot in commercial real estate, consumer spending habits, commuting patterns, and so on. If you understand the impacts of these changes, you can make well-informed decisions on industry and brand choice, site selection, launch timing, marketing strategies, and more. Collectively, this sets up new franchisees in 2021 for greater success than at any time in recent history.”

“COVID 19 has taught us many lessons,” adds Prittie. “I would consider hitching my wagon to a franchise system that has been deemed an essential service or one whose product or service has catapulted into a must-have, high-demand position.”