There’s no doubt that 2020 and 2021 will go down in the books as two of the most interesting years in franchising. Franchises from every business sector have been faced with significant challenges in the past year-and-a-half and have risen to the occasion. COVID-19 gave franchising an opportunity to shine and it’s in a great place to flourish in 2022.
A FRANdata survey revealed that the total number of franchised establishments in the U.S. will grow by an impressive 3.5 per cent by the end of 2021. This growth is significant, but it’s not surprising. In a climate where mom and pops were left to figure things out for themselves, franchise business owners had teams of professionals guiding their way.
At IFPG, we have seen an influx of candidates since March 2020. First as a result of layoffs and furloughs, and then as a result of “The Great Resignation.” The Wall Street Journal recently reported that a record 4.4 million Americans quit their jobs in September 2021 alone.
That number follows a previous milestone set in August 2021 with 4.3 million people jumping ship. The Great Resignation is very real. People don’t want to be stuck in soul-crushing jobs anymore. They want work-life balance and financial independence and they are finding it through franchising. 2022 is poised to be a memorable and lucrative year for franchising. Here’s what we’re seeing:
Young candidates coming on the scene
Gen-Z is considered one of the most entrepreneurial generations ever and they will surely make a mark on franchising. According to a recent Nielsen study, about 54 per cent of Gen-Z indicated they wanted to start their own company. As a father of three Gen-Z children, I see it firsthand. My kids and their friends are fascinated with entrepreneurship and franchising. In the franchise consulting business, we are seeing more of the same.
A new, younger group of candidates are surfacing. Parents are investing in franchises with their children with plans to leave a legacy. Franchising is creating a new type of family business and possibly an alternative to a four-year college degree or perhaps a graduation present that keeps on giving.
In terms of technology, COVID-19 brought us light years ahead of where we would have been without a pandemic. Virtual conferences may never fully replace in-person events, but they now have a permanent place in the franchise world.
At IFPG, for example, we would never have considered a virtual conference if it weren’t for social distancing restrictions. Not only did we pull it off, but it was a huge success. Our members have asked to continue these virtual events in addition to our live events. And we’re not the only ones who made it work. Virtual conferences are now part of the lineup for many franchise organizations.
Same with virtual discovery days and training. In fact, video teleconferencing has become so commonplace that it is not only taking the place of in-person meetings, but it’s also taking the place of phone calls in many instances. We’ve had the technology all along, but we never thought to use it!
At the franchisor level, technology saved the day during COVID-19. Many brick-and-mortar restaurants and gyms moved to touchless ordering and streaming services. Franchisors continue to invest in technology and stay prepared for any second wave or future shutdowns. These are factors candidates will look for when considering a brand in 2022 and beyond.
Thanks to COVID-19, validation calls now come with a new set of questions. Candidates want to know what kind of support went down during the pandemic, especially during the most uncertain times. Did the franchisor help with PPE funding and have a huge presence, or were franchisees left to figure things out for themselves?
Candidates will ask how the franchise will perform in the new economy, how the franchisor addresses the potential for lockdowns, inflation, labor shortages, and possible supply chain issues. In 2022, franchisors can anticipate these types of questions.
A few years ago, franchise consultants were not well known outside of the industry. Franchising’s professional matchmakers may very well have been the industry’s best kept secret.
But now, as the industry grows, franchise consulting has become a prominent and lucrative career path. Franchisors have come to rely on these professionals to vet and identify well-suited candidates.
At IFPG, we have trained more than 50 new franchise consultants over the past year alone, and the numbers keep growing. The beautiful part is that with all the interest in entrepreneurship and the exploding opportunities in franchising, the pool of franchise candidates has never been better.
“In all my years of franchising, I have never seen a more exciting time than now”
Communicating and storytelling
In a world driven by social media and texting, we have come to rely on new types of media to get our messages out. These days, franchisors not only need to communicate their brand’s differentiators, but they also need to tell the brand’s story. Candidates want to know about a brand’s history, a brand’s team, and a brand’s franchise owners.
Using video to tell these stories is a huge plus for franchisors and it will quickly become a mainstream method. A memorable video testimonial will have more weight and will resonate with candidates on a much higher level than any clever marketing copy ever can.
Communicating through text messaging is another way franchisors develop relationships with candidates these days. The idea is that it feels friendlier and less formal than a canned email. It’s also harder to miss. Similarly, personal messaging through social media cuts through the formalities and is gaining in popularity as a way to foster relationships between franchisors and candidates.
Umbrella franchisors and FSOs
This past year, we have seen alliances form in franchising and a number of umbrella franchisors pop up. This trend toward parent franchisors acquiring other, synergistic brands is growing because it’s a smart way to share resources and sell franchises. With similar characteristics, brands within an umbrella will appeal to the same candidate by design.
So if a candidate’s desired territory is not available with one brand, for example, the candidate can shop in the same place and likely find a similar brand with open territory.
Franchise Sales Organizations (FSOs) are also becoming larger and more standard in franchising. FSOs help emerging or struggling brands polish and streamline their systems as well as manage sales and marketing. Many of these brands are diamonds in the rough that can be incredibly innovative, but need that extra support to take off. FSOs can turn an unknown brand into a household name, so I always pay attention to the brands they take on and enjoy watching their growth.
In all my years of franchising, I have never seen a more exciting time than now. I am so optimistic for the future and for an amazing 2022! Happy New Year and happy franchising!
Red Boswell is the president of the International Franchise Professionals Group (IFPG), a membership based franchise consulting network with more than 1,300 franchisors, franchise consultants, and vendor members