Looking at the franchise world in the United States, one might feel a little like Dorothy and her pals – recession, politics, inflation… oh my! But if you dig just a little deeper, you’ll find that franchising in the U.S. is still very much boomtown.
With a resurgence of multiple legacy brands, new innovations in business models and technology used by industry leaders, and the introduction of completely new industries in the sector – along with all the opportunities they, in turn, create – franchising in the US is undoubtedly still alive and well!
As the U.S. grapples with an economy that has unique attributes, the data shows up franchising as a solution, as always. In 2022, it’s estimated that there will be some 750,000+ franchise establishments in the United States, outputting nearly 700 billion U.S. dollars and employing 7.5-plus million people.
As new potential franchisees continue to look to enter the sector, they are helping to balance an impending recession, which has historically been good for franchising, with inflation and expensive credit. Those who have the fortitude to move forward in these uncertain times will certainly create the next generation of wealth and independence.
When you are going through hell… just keep going
Markets shift. Trends change. Pandemics happen (who had the heads up on that one?). Companies grow and companies die. So how do you navigate how and where to invest your time, your money, and your future?
Look for the brands that are telling the right story. Look for brands who are adapting their way of thinking, maybe even their entire business models to address the environment around them. The archaic adage of “if it ain’t broke” will inevitably be etched into the career tombstones of those unwilling to embrace the fact that every day is indeed a new day.
“Innovation distinguishes between a leader and a follower”
Steve Jobs may be on to something with this famous quote. Franchising has been full of leading innovations since the very idea of the model. In fact, innovations through franchising date back to 1851 and the Singer Sewing Machine Company.
Through the years, franchising has given birth to innovation in operational efficiencies, technology, and systems – even with basic business principles. Never underestimate the power of a group of franchisees with a common goal when it comes to fostering innovation. Good franchisors harness the power of the collective, and new concepts and ways of doing business are born.
Resilience – a pillar of franchising
2020 brought one of the biggest challenges in many of our lifetimes. How do we navigate around an invisible enemy we know nothing about? COVID is not gone and likely never will be. As we return to the new normal of our lives, many small businesses are still picking up the pieces of what used to be their dream, and often their livelihood.
As we entered the early days of the pandemic, franchisors and franchisees worldwide sprang into action. Plans were hashed, implemented, changed, adapted, implemented again, and changed again – over and over. The difference was that we did it together.
There was a collective all-hands-on-deck approach to helping franchisees survive this new threat. Resilience and creativity won the day as concepts pivoted, adapted, shared information, and led the charge in doing business in a new and unfamiliar environment.
There were virtual panels and conferences, and new groups of franchisors were formed, simply to share intel. We grew together, we survived together, and as a result, most thrived together, through an unprecedented time.
The new normal
The innovation and raw “sticktoitness” found in franchising have set trends for our new normal. New industries, such as cannabis, emerged as a winner coming into our post-pandemic world. The industry in the US and Canada thrived and complications in entering the market opened a perfectly-timed door for franchising to come in and offer stability and a roadmap to an otherwise fragmented industry, which previously had no real brand leader or consistency.
Other concepts implemented new models and ways of doing business as people became used to “no/low contact” ways of trading. The drive-through models, typically associated with fast food, translated well to QSR, and other industries with leaders already focused on the model emerging as ones to watch (and invest in).
The very notion of customer service has changed and authentic connections reign supreme. Digital communications on both existing and new platforms continue to be critical to a brand’s success. This way of communication, and the associated tools, are just as important from a franchisor to a franchisee as they are to a final customer.
Storytelling that would make even Mother Goose proud
Making authentic connections through storytelling is the new way to market your brand. Though the brand story is important, our consumers – both product and franchisee prospects alike – also want to hear the story behind the brand.
The sizzle quickly fades, and hollow brands are left in the dust, so the story of founders, teams, leadership, and depth of bench is now key in buyers’ decision-making process.
Stories connecting people and brands to community, charity, and a people-first mentality are leading the franchise pack. The days of “but we have the best product” are long gone. Buyers want substance and a brand that’s connected to the world around them.
Building a team
Another area of change in business is attracting top talent to build a team. Balancing the collaborative atmosphere of an office environment to years of doing virtual calls in a nice top and pajama bottoms is a new consideration for employers.
The past few years have leveled the generational playing field, with a need for some control and freedom that didn’t widely exist pre-pandemic. Understanding the needs and desires of future team members will be key to success, as the old checkboxes of a cool HQ, good teammates, and a competitive salary are no longer enough.
The younger generation of employees coming up are bringing an incredible amount of new energy, along with innovation and a strong grasp of technology. They are well-accustomed to operating virtually, sometimes since entering the workforce. Their needs have changed, and with them, the workplace landscape will look different.
Alive and well
So yes, franchising in the US and around the globe is alive and well. Like a bewildered time traveler arriving in the future, things look different now, and maybe even a little far-fetched as the world around us has changed so drastically.
The glass-half-full interpretation is that it has changed for the better. Employees and employers alike have re-evaluated what’s important. Potential franchisees everywhere are taking the leap, despite some of the current challenges, to change their future and carve a new path. Change is inevitable, change is healthy.
Can you adapt and stay relevant? Far before any of us were alive to see it, franchising has been game-changing, bringing together some of the very best and brightest in innovation, and that continues today, maybe more now than ever before.
Franchising will continue to drive forward, even in these uncertain times. The safety net and support of a good franchise will continue to change lives, will continue to shape communities, and will always be a solution to whatever these crazy times throw at us.
We are stronger together. We are franchising. We are the future.
Justin Livingston, CFE, is the owner of Franchise Transformations, a consulting firm working to franchise independent businesses, help U.S. franchises expand domestically and abroad, and helping foreign franchises enter the US market.