Coronavirus and Franchising: What a 20% Jobless Rate Would Mean For Franchising

Even with a proposed $1 trillion economic stimulus, Treasury Secretary Steven Mnuchin reported the U.S. could see 20 percent unemployment aftermath. While it was stated that it wasn’t a prediction, he told senators that the coronavirus could be worse than the 2008 financial crisis.

“During the meeting with Senate Republicans today, Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case,” Treasury spokeswoman Monica Crowley told Bloomberg.

What this could mean for franchising:

Economic downturns help franchise growth: While challenging to think positively during the turbulence we are facing as a world, franchisors do need to think about what happens next – as every storm eventually runs out of rain. During a downturn, the buyers come out of the woodwork – looking for safe alternatives to their careers. If you are front and center as a brand, you have a chance to be seen by those exploring new options. If you are behind the curve, those buyers will be swallowed up. The franchise brokers will be licking their chops, too, as they have spent the last ten years establishing incredible local-market presence. Regardless of where the introduction comes from, all of those years of marketing what franchising is, what your category is, and what your brand is has the potential to spike great growth.

Take care of your franchisees: The tone you set with support to your franchisees will pay dividends when we get past this. When new prospects are performing due diligence, while the question of, “would you buy this brand again” will still exist, so will, “what did your brand do to support you during coronavirus?”. Make sure you are communicating well to your consumers, your employees and your franchisees. Think about the long-term as much as humanly possible.

With unemployment comes access to talent: Both for you as a franchisor and to your franchisee, there will be talent, and they won’t be as locked up as they were before. This is your opportunity to make sure you have an elite team – a team who can support you in a crisis, support your franchisees in a crisis, and come up with a plan to get beat the storm.

Get your ducks in a row: There will certainly be some opportunity to think about those ducks, line them up, and be ready to deploy. In stage one (short-term), we will be playing more defense than offense. This is protecting the great team that you have and finding out how you can be a support system. Then, when we get to offense, strategize what your plan is with real estate, with customers, with franchise growth, with innovation.

Think about what you would have done differently in 2008: Write it down, and don’t do it again.

1851 will continue to cover the coronavirus and its impact on franchising. Tune in tomorrow, Wednesday, March 18 and Thursday, March 19, at 1 p.m. EDT / 10 am. PDT for parts two and three of the webinar series. Register here.