Despite the struggles of many businesses in the wake of the pandemic, 2021 may be one of the strongest years ever for franchising, predicts Mark Siebert, CEO of iFranchise Group.
“Franchise companies better be prepared for the coming boom in franchise sales, or they are likely going to miss out on a once-in-a-lifetime opportunity,” Siebert says. “We are already seeing an increase in interest from those looking to buy their own franchises and are expecting that this will materialize as tidal wave of franchise sales by 2021.”
According to Siebert, a “triple witching” effect will combine three primary drivers: high levels of unemployment at the top end of the salary market; ready access to debt capital at historically low interest rates; and after more than a decade of growth since the last recession, many Americans have access to substantial savings in the form of home equity, retirement accounts, and personal savings.
Other factors will contribute to the success of these businesses as well, he adds. For brick-and-mortar businesses, commercial real estate is more readily available in prime locations and perhaps at lower rents. With many other displaced workers, staffing a franchise business may become easier than ever given the now larger labor pool. And politicians will be fighting amongst themselves in an election year to come up with the best stimulus package for putting small businesses back to work.
Media coverage of the pandemic has helped shine a light on the vital role franchised businesses play in the economy. Given the current health concerns, consumers feel a level of confidence in walking into a business that is part of a larger network in terms of quality control standards, training of staff, and consistency of product.
“This, too, will make franchise ownership attractive for the qualified candidate,” Siebert says. “These networks provide a degree of certainty after emerging from a time of unprecedented uncertainty.”
For companies that have not yet developed their franchise programs, it typically takes at least four months just to get the needed documentation in place, starting with an analysis of whether the business is franchisable.
“Of course, not all businesses should be getting ready to franchise. If the business model does not work in the new economy, the focus needs to be on making the business work before even thinking about expansion,” Siebert says. “But if the business model is ripe for growth, there will never be a better time to franchise a business.”