Your Questions About Post-COVID Franchise Growth Answered

At the end of May, just as states across the country were preparing to relax social-distancing orders and allow businesses to reopen to the public, 1851 Franchise’s Franchise Growth Mastermind group hosted #TheGreatReturn. The two-day virtual franchise summit was the industry’s first since the arrival of the coronavirus pandemic. Featuring nearly 40 development experts from across the industry, #TheGreatReturn offered a deep dive into an array of topics regarding franchise growth after COVID-19. 

At the end of the summit’s first day, 1851 Publisher Nick Powills and Managing Partner of The Internicola Law* Firm, PC Charles Internicola hosted a happy hour with guests Brent Dowling, Co-Founder & CEO at Raintree*; Michelle Rowan, President & COO at Franchise Business Review; and Keith Gerson, President of Franchise Operations at FranConnect.

Over drinks, the panel addressed a range of audience questions regarding franchise growth and the state of the industry. 

You can watch the full conversation in the video above, and we've collected some of the highlights below.

Will in-person franchise gatherings come back this year?

Michelle Rowan: Well, if I’m not crazy, I think we got an email today that says that IFA will be in-person, so I think that decision has been made. I’ve said over the past week that I wouldn’t want to be in the position to make that decision. I would understand it either way, and I know it will upset people either way, but I think we need that — we need to have that in-person event. How well it’s going to be attended is the next conversation to be had. 

Brent Dowling: I think until there’s a vaccine, I just don’t know about the confidence in folks wanting to actually get on a plane — it’s one thing to go to a restaurant, but to get on a plane and travel and take that risk to another level, especially when we’re seeing how proficient we can be in virtual conferences and great summits like this, is a different story. I don’t know if I would personally want to take the risk just yet, so it’s a guess, but I think it’s probably going to be slower than we might think.

From a growth standpoint, how does this affect emerging brands and the number of franchise owners they are looking to add?

Keith Gerson: I try to collect as much data as I can, and as I’ve been conducting our franchise sales index rollout for 2020, I’ve been doing live polling. One of the things I’ve seen is that there is a self-fulfilling prophecy. There are those that are just not spending on marketing right now because they are afraid that the time’s not right and that the tone isn’t going to be correct. Then there are others that are doubling down right now. So, we tracked that there were 37 percent of franchisors that are actually seeing more leads today than they were prior. I think that the answer to the question that was asked is very situational. There are so many factors, including what industry you are in, what kind of brand awareness you have, etc. I spoke with three franchisors today who told me they’ve never been busier than they are right now, and I’m even talking about industries that are shuttered, like the health and fitness space and salons. So I think for some, it’s what you make of it. If you don’t spend, you’re not gonna get.

How do you think the industry will look at 2020 profits and losses that may be worse than average for a majority of franchisors and better than average for a minority of franchisors?

Charles Internicola: For our clients, we’re actually recommending Item 19 updates as we finish the first half of 2020, just to start putting in the data. We’re expecting to segment the data in the 2020 FDDs. Still, I almost believe the downturn is going to be irrelevant if we get back to a post-COVID world and we’re up and running. I would challenge franchisee candidates that over-rely on brands that did well in COVID may not be making the right strategic decision — you are over-indexing on the idea that this could happen again. For our clients, we are adding January through June data for Item 19 to get it out there, because I know it’s going to be part of the conversation. Moving forward, we’re going to break down data for 2021 and give as much information as we possibly can.