It may not be time to string up the holiday lights just yet, but that hasn’t stopped the prognosticators from placing their bets on what the franchising industry is going to look like in 2021. And we’re right there with them.
As a whole, interest in the franchise business model has remained stable, despite pandemic conditions. The leading cause of this are still up for debate, but a few factors we noted in 2020 are positive signs that franchising will remain a strong buy recommendation for the new year to come.
Let’s look at what we know.
Deals Closed Despite Pandemic
FranNet’s lead generation to deal closing conversion rate actually increased throughout the first three quarters of 2020. Q1 was 5%, Q2 rose to 6.7% and Q3 hit 7.5%. The interest in buying a franchise didn’t seem to fall off as a result of the pandemic conditions.
Some Franchise Sectors Did Well
The lockdowns of 2020 introduced us to “essential” and “non-essential” businesses. In the franchising world, “essential” businesses have always been known by another name, recession-resistant—and these categories continued to do well. They included home services, salon/beauty care, automotive and handyman concepts.
Now let’s look at what we don’t know, but from where we’re sitting, looks like uplifting news for 2021:
3 Positive Signs
Despite the pandemic, three factors have combined to indicate, as they have in the past, that franchise sales should climb: 1) higher unemployment among high-salaried workforce, 2) increased access to capital at low interest rates, and 3) recent economic growth that’s led to more equity and savings.
Chaos = Opportunity
If you only focused on the bad news, things probably did seem bad. But one landlord’s tenant that’s gone out of business creates an opening that becomes the next landlord’s renter. Commercial real estate, even in prime locations, are in play. The rise in unemployment has deepened the talent pool for staffing a franchise with quality hires and the promise of another round of stimulus awaits the nation.
Part of what makes franchising’s prospects look strong in 2021 are the same factors we use to convince entrepreneurs to buy them. Consumers are betting on companies and brands that can weather the pandemic’s effect. And franchises, with proven business models, strong support from corporate and quality levels of consistency will likely be rewarded when the storm breaks. Franchises can go a lot further in providing certainty in an uncertain world, when it comes to delivering products and services.
As news recently broke of not one—but two highly effective Covid-19 vaccines, there is reason to hope that 2021 will bring both healing and a release from the grip of this pandemic. And when it does, the snap-back of our pent-up economy may create a tsunami of new opportunities for franchisors and franchisees alike. Our fingers are crossed. Because if it does happen, we’re definitely here for it.
“Thriving through Covid” is FranNet’s new series of inspirational articles featuring positive news, business owner profiles, success stories, and educational updates—all of which demonstrate the resilience of the franchising industry. We want you to know that even during this uncertain time, franchising can offer you an alternative path forward—and a new opportunity to achieve success through business ownership.
Check back with FranNet twice weekly for new articles and let us know when you’d like to begin an entrepreneurial journey of your own!