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Founding Partner of Spadea Lignana Highlights Franchise Industry Predictions for 2023

Professionalization, competition and a strong market are all on the horizon in the year ahead, according to Tom Spadea.

By Victoria CampisiStaff Writer
SPONSORED 2:14PM 02/02/23

The past year has been a big year for franchising. And Spadea Lignana Franchise Attorneysan elite franchise law firm with decades of experience serving hundreds of franchisor clients nationwide, has seen it all. 

“2022 was a good year – it was a year of transition,” said Tom Spadea, one of Spadea Lignana’s founding partners. “We’re still healing over some of the remaining scars of the COVID-19 pandemic, but for the most part, there was a lot of growth within the franchising industry.”

Spadea, who has had a long history in franchising, predicts several changes in 2023. 

A Shift Towards More Professionalization 

Spadea noted that the more outside finances come into the franchise industry, the higher the standards for everyone become. 

“There's an expectation from franchisees that franchisors are more professional – a little bit more buttoned up,” he said. “They expect them to have better technology and training teams and to be more professional.” 

This also means that prospective franchisees expect more transparency from brands. For example, Spadea says that having a solid Item 19 is going to become even more important. “Not showing your numbers is something that is just becoming a smaller and smaller minority,” he said. 

Franchisors to Become Increasingly Franchisee-Centric

Spadea believes that as franchisors continue to evolve their own offerings, they're becoming more franchisee centric. “Franchisors are starting to evolve and understand that it's the unit economics of your franchisees that are a more important metric than how many franchises you sold,” he said. “That’s something I’ve always felt is the most important thing, and the industry is slowly catching up to that.” 

In the past, private equity firms were more focused on areas such as franchise sales, growth and the home office head count, but Spadea sees a shift towards the unit economics and the satisfaction of the franchisees as more important than the unit economics or raw unit growth of the franchisors. 

Competition to Increase

Every year, more and more franchise brands enter the franchise market. However, because the growth rate of franchisors is outstripping the growth rate of franchise buyers, Spadea says to expect more competition in 2023. 

“I think the challenge that the industry faces is that, to be successful as a franchisor 10 years ago, the bar wasn't as high as the bar is now,” he said. “There’s much more transparency from internet reports, Google reviews, etc., and it is becoming harder and harder for a bad franchisor to hide. So I think that the challenge for franchisors is to just be better at the game of being a coach, mentor and leader as the best strategy to attract franchisees.” 

An Overall Strong Market

Spadea believes there will be a strong market for franchising in 2023. The uncertainty that came with the pandemic created a mindset of independence and entrepreneurship in many workers throughout the country, and this is something that he sees continuing.

“We’re seeing a trend towards business ownership in general, which is really good for franchising,” he pointed out. “I think there’s going to be more franchise buyers and more franchise systems. It's a good time to be in franchising. I will knock on wood saying this, but really I think we have some great years ahead of us in the franchising industry.” 

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