When Will Franchise Development Pick Back Up?

The COVID-19 pandemic has forced businesses across the globe to press pause on operations. With consumers being told to stay inside and unprecedented uncertainty within the economic climate, it’s difficult to predict when things will go back to “normal.” 

However, despite the current circumstances, franchise industry executives are staying optimistic when it comes to the future of franchise development. 1851 Franchise asked six executives to weigh in on when they believe development will pick back up. While their answers vary, there’s one constant: eventually, there will be an increase in activity.

Paul Segreto, president and CEO of Acceler8Success Group

I believe development activity will pick back up in two phases. The first is already starting with current franchisees, multi-unit operators and 'franchise' investors seeking out opportunities to add to their stables. Whether it be to take advantage of prime lease space, 'grab' multiple locations or even to capitalize on a small brand in trouble, I see this interest continuing and building steam moving forward. The second phase will begin slowly as confidence begins to build. I think the first part of phase two will be an increased interest in lower investment concepts where franchisees are able to run the business with another family member. The thought of having other people's livelihoods in their hands should another crisis hit will be a deciding factor, as will minimal rent and operation costs. Food service concepts will mostly be ignored by these phase two candidates, as well as transitioning or retiring executives. The second part of phase two will be those relatively well-off candidates looking to diversify, stay busy, and be somewhat involved in mid-range investments or multi-pack opportunities with a lower investment level brand.

Tom Parks, CEO of Premier Franchise Solutions

There is truth in saying that a recession can be good for franchising. When there's instability in the economy and job market, people will seek alternative opportunities and franchising is a great option. That said, none of us have lived through something like this. I keep hearing projections from "experts" and can't help but think to myself, "thanks Nostradamus.” Anything anyone says at this point is a guess. Sure, we can make educated predictions based on tragedies that have occurred in the past, but it's a guess nonetheless.

Michael Porpora, agency partner at Marquis Professional Risk, an Acrisure Agency Partner

After experiencing vulnerability in the workforce, self-reliant people will likely tap into their entrepreneurial spirit, which we all know the franchise industry thrives on. I also think the bounce back is going to be much higher than expected, particularly in the personal care sector. Concepts such as membership-based gyms, hair salons, nail service providers and more are going to boom in popularity.

Lisa Welko, president of Integrity Franchise Group

If the amount of advertising I've been receiving from lead generation sources is any indication, candidates are at home and looking for opportunities. Franchisors are going to need to adjust their previously strict processes and let these candidates sit in the driver's seat. That's not going to be popular with some franchisors, but at this moment in time, those are the brands positioned for success—the ones willing to bend a bit on their development process and take time to answer even more questions.

Renee Rosen Israel, chief franchise officer at Modern Market

Speaking from a place of being on the verge of launching a franchise program for an established fast casual brand, I believe that while the short-term candidate pool will be smaller for the next few months, there are opportunities with those looking to take advantage of the shakeout. This includes those looking for a real estate grab, attractive loan environment and franchisors willing to be more flexible to get the right candidates in the pipeline for when we do recover.

Todd Leonard, vice president of operations and franchise development for Executive Care

I feel that the bounce back will start with many people being home for the first time in their careers and experiencing a flexible lifestyle for the first time in their lives. The longer offices stay closed, the more it will almost become like going from college to our first job again. This will lead to many prospects starting the discovery process. As people return to a structured office, long commute and continued uncertainty, the desire for control will grow even more, making franchising a lot more attractive. The sectors and brands that can tell a story of how they survived and thrived through this unprecedented time will win the day. Winning franchisors will blend the quality of life offering with the, “Wow, if they can make money during this, I can’t fail” mindset. The next phase will be the unemployed, which in my experience, tend to go through roughly three months of searching before they start to lose hope. At that point, the idea of looking at alternative opportunities becomes a much more attractive option. Millennials and especially Gen Y [candidates] will lead the charge, with specific interest in service brands. Mid-to-late summer will start the push with a strong close to the year.