Franchising In 2021: Optimism Abounds
As we look back over the past year and think about the impact Covid-19 had on the economy, there is a general perception that it dealt a blow that would take businesses years to recover from. While some establishments were unfortunately forced to close permanently and customer spending has not yet returned to pre-pandemic levels, the outlook for business in 2021 is strong. To use an analogy from a famous Mark Twain saying, “The reports of my death are greatly exaggerated.”
Earlier this year I had the opportunity to attend a franchise conference and spend 20 hours meeting with a series of franchisors on Zoom calls over the course of the week. It was a valuable, productive experience, and the tone was very optimistic. Admittedly, franchisors can be overly optimistic, but the sense of optimism is consistent when I speak with franchisees and others in the business community.
While certain industries were negatively impacted by the pandemic, it is important to remember that many franchises operate in sectors that did not suffer from shutdowns or customer contractions. Those businesses are more on the service side and often work out of homes, offices and office warehouse locations. Read more at forbes.com.
The Future of Franchising
What does the future of franchising look like? Bright, according to many market reports. This industry is growing fast and furiously with more franchisees owning several units, better technology getting incorporated into stores, and a new business model taking shape.
More Multi-unit Owners: What happens once you have mastered the tried and true formula franchises have designed for their franchisees? If you’re like many franchise owners, you start opening another location. And then another. By recreating your success in multiple locations, you can quickly grow your revenues and increase your business’s sustainability.
Enhanced Technology: It’s not a secret that technology is changing quickly but the franchise industry is struggling to keep up in many ways. For some franchisees who have owned and operated a business for several years, switching away from analog technology and over to the digital technology available feels like a step backward. For example, some franchisees feel more comfortable using a cash register rather than an updated point-of-sale model. Some restaurant owners prefer the standard menu boards in lieu of digital menu boards.
Still, the franchise industry is quickly realizing the importance of making this switch and now, franchisors are working methodically to update all of their franchise locations with updated technology. Most franchisors won’t force this technology on their franchisees but it will be strongly encouraged through a deployment stage on an incremental basis depending on cash flow and franchisee needs. Read more at franchisedirect.com.
10 franchising trends to watch out for in 2021
While the world continues to respond to the current unpredictable economy, the resulting trends are opening doors of opportunity for the franchise industry over the next year.
Successful businesses tend to have the talent for spotting trends over fads. While a fad is a passing fancy, a trend points towards the future and opportunities. Exploring franchising trends that emerged in what will prove to be one of the most challenging economies we have ever seen, everyone in franchising can find opportunities like never before.
Franchising only works when franchisors get wealthy by helping their franchisees get wealthy. While this might sound obvious, the trick is creating a cohesive business that continues to succeed based on past success. When done right, franchises create a cycle, with franchisors actively promoting their franchisee’s success and franchisees wanting their franchisors to succeed. This keeps everyone focused on the same goal and avoids a dangerous “us versus them” mentality. Read more at globalfranchisemagazine.com.
“Business isn’t a science. It’s not like mixing this chemical with that chemical to get a predictable outcome. You can make a plan and set a goal and even be reasonably sure that you’ll reach that goal, but until you do, you won’t know if you will.” – Fred DeLuca, Founder and CEO, Subway
Why Franchising? Why Now?
A once in a lifetime global pandemic touched every aspect of our lives. How we live, how we eat, how we greet each other and how we work. Except for a few dozen billionaires, who watched their wealth grow despite the economic ravages of COVID-19, nearly everyone was glad to see the year 2020 fade into the rear-view mirror. Unprecedented economic fallout descended upon the intersection of business and commerce, leading to unemployment levels not seen in the past century.
Seems like the ideal time to run out and buy a franchise to kick off 2021, doesn’t it? While at first glance, the risk-averse among us would put up the sign of the cross, slam on the brakes, or even ask the questioner if they’re feeling a bit feverish. But there’s another side of the coin to consider. As the great ESPN college football commentator Lee Corso would interject—“NOT so fast, my friend!”
So, it begs the question, is there a silver lining to consider for buying into a franchise operation during the middle of an economic crisis and a pandemic that’s still a threat—despite vaccines? Why franchising? Why now? Read more at score.org.
Pros and Cons of Buying a Franchise
Franchise businesses have a history of creating jobs faster than other startup businesses. The positive economic outlook for franchises has lured many would-be small business owners toward buying a franchise.
Understanding the advantages and disadvantages of franchising can help you decide whether it is a good choice for you. The number one advantage is that you basically receive a kit with plans, a guide, and support for starting the business.
The big disadvantage for many people wanting to start up a business is the initial costs, or outlay, necessary to start a franchise.
Buying a franchise can be a worthwhile endeavor, but choosing the right franchise is important. If you’ve done your research, and picked a franchise that works the way you want it to, you’ll more than likely be successful. Read more at thebalancesmb.com.
“If you work just for money, you’ll never make it, but if you love what you’re doing and you always put the customer first, success will be yours.” – Ray Kroc, Founder, McDonald’s
How to Open a Franchise Business
A franchise organization builds a solid brand and then licenses the brand to independent storeowners. Franchise organizations provide franchisees with ready-made plans for operations, marketing, finance and human resources procedures, as well as best practices and training programs for all job roles. Franchise outlets gain a huge competitive advantage by piggybacking onto the national marketing efforts of the franchisor. Read more at smallbusiness.chron.com.
How Much Will You Need to Fund a Franchise Purchase?
Franchise ownership is a powerful way to become a business owner.
Franchises come with established brand recognition, best practices, support and processes that can accelerate profitability and growth.
Starting a franchise is unlike starting any other type of business. As seen in the recent post, Women in Business: Is Franchising in Your Future?, more women are starting small businesses of all types, including franchises. They have access to networks, turnkey marketing and operational plans and many franchise-friendly locations across the country.
Starting a franchise business also comes with a number of fees before and during your ownership that are unique to the business type. How much will you need to fund a franchise purchase? Let us take a closer look at benetrends.com.
The Top 20 Franchises of 2020 From the Entrepreneur Franchise 500
Entrepreneur has been ranking the top 500 franchises in America for 41 years. We use a five-pillar system to evaluate the hundreds of entries we receive every year. Those five pillars (in no particular order) are:
- Costs and fees. This includes the franchise fee, total investment and royalty fees.
- Size and growth. This counts open and operating units, growth rate and closures.
- Support. This pillar takes into consideration training times, marketing support, operational support, franchisor infrastructure, financing availability and litigation.
- Brand strength. This aspect is all about social media, system size, years in business and years franchising.
- Financial strength and stability. This considers the franchisor’s audited financial statements.
Every year, the competition grows thicker and thicker as new businesses create compelling cases and the old-school, established ones keep innovating. Even making the Franchise 500 is a huge accomplishment, but which ones managed to crack the top echelon and make our top 20? Read more at entrepreneur.com.
Is a Franchise Right for Me?
When thinking about whether a franchise is right for you, it’s essential to dig deep into your own psyche. Make sure you are investing in a business for all the right reasons. You have to desire it! More than that, a franchise has to be a good fit.
Consider the pros and cons of franchising carefully. But most of all, understand your needs and motivations. Knowing whether a franchise is right for you depends on knowing yourself and what you want out of life. The right franchise opportunity can be rewarding, even life-changing. Read more at smallbiztrends.com.
“Life will test you, that’s a promise. It’s what you do with the challenges that determines your failure or your success. “ – William Rosenberg, Founder, Dunkin’ Donuts
Franchise vs. Start-up: Which One Works for You?
You are tired of working for someone else and you want to start your own business, but don’t know if you should do it from scratch. Below you can find the pros and cons of franchises and startups, and decide which one works for you.
Higher Success Rate: A franchise is a proven system. All franchisees operate under a common system and they are only responsible from their day to day operations. Also, they get trained about the product line, marketing, how to deal with staff and other aspects of their daily activities. Basically, they get an ongoing support for their businesses which brings them success.
Brand Recognition: Franchises bring brand awareness with their names from day one. Therefore, customers will know about your products which will increase your sales. By buying a franchise, you are actually buying a turnkey business that is ready and waiting for you to start. Read more about the advantages and disadvantages of a franchise at entrepreneur.com.