Why a Turbulent Economy is Good News for Franchise Development

Even as states across the country slowly begin to reopen after more than two months of lockdown measures, few are predicting anything close to a full rebound for an economy devastated by an abrupt, months-long halt to spending in virtually every industry. For many businesses, the path to recovery remains long and uncertain, and it may be years before the economy at large begins to bounce back. But amid those dire circumstances there is one notable bright spot for the franchising industry, which is about to experience a dramatic influx in inquiries from new prospective franchisees. 

That is particularly good news for franchises because growth in that industry is “all about momentum,” says Mainland* CEO and 1851 Franchise publisher Nick Powills. Franchise development teams that take advantage of the current opportunity can quickly make up for momentum lost in the spring and build new momentum to become a dominant player in the post-COVID landscape.

Along with Charles Internicola, founder and partner of the Internicola Law* Firm, Powills recently hosted #TheGreatReturn, a two-day franchise development summit featuring nearly 30 development experts from across the industry. 

“Whenever we are hit with another uncomfortable moment, we pump the breaks,” Powills said in his opening remarks for the summit. “As humans, there’s nothing wrong with this. In fact, that all makes you normal. In franchising though, it can lead to temporary damage, slowdown, trouble. Why? Sales and growth is all built around momentum.”

Fortunately, franchise brands who may have ceded some of their development momentum in recent weeks have a unique opportunity to quickly make up for those losses, provided they know how to take advantage of the current moment.

At time of writing, the U.S. unemployment rate is 14.7 percent, the highest it’s been since the Great Depression and four times the rate reported in February, before the arrival of the coronavirus pandemic in the U.S. And while experts are predicting that number will shrink over the summer as businesses get back to work, new research suggests that many of those job losses may be permanent. 

This spring’s widespread layoffs have little to do with job performance, of course, meaning many newly unemployed workers have the skills, experience and attitude typically associated with high-performing franchisees: leadership experience, business acumen, financial literacy, marketing skills and more. 

Even if the majority of job losses prove to be temporary, many laid-off workers are going to be looking for a new path forward, one that offers more control over their own career or allows them to follow a passion they had previously set aside. Those are the exact motivations franchisees most commonly offer for starting their business. 

In order to effectively tap into that growing pool of qualified franchisee candidates, franchisors need to be able to tell a story that stands out from the thousands of other franchise brands hoping to convert the same leads. And the stories that will attract this new class of prospects will be stories of resilience, support, durability and flexibility. Most of these new franchisee prospects are experiencing the second historic economic downturn in their professional careers. They know better than to think the economy will be reliably prosperous after recovering from the current crisis, and they are looking for the promise of stability in the face of unpredictability.

There are any number of ways to tell that story, and development teams would do well to align all of their marketing and PR efforts to ensure it’s being told correctly and consistently, but the best tool a franchisor has when it comes to storytelling is their existing franchisees, and that brings us right back to momentum. 

The coronavirus pandemic has upended the business and consumer landscapes. The deck has been re-shuffled, and it’s not yet clear which business models are best equipped to thrive. So now, everyone is looking around to what businesses are showing signs of growth in this new environment. By landing a few strong development deals in key markets, franchisors can show the industry that their brand is poised to succeed in the post-COVID landscape. That will attract attention, which will quickly turn into new leads. 

Independent businesses have been brutalized over the past few months. Unlike their franchise-backed counterparts, independent businesses have no network of support to lean on, to share advice, stock and resources when times are tough. Many of them have already folded, and others are barely hanging on. It’s not unreasonable, then, to expect that franchising will be the dominant business model of the very near future. This is no time to pump the breaks. Franchisors need to recognize the opportunity in front of them and invest in growth today so they can position themselves to thrive tomorrow.