Dramatic Rise in Franchise Sales Predicted

While many parts of the small business community are in limbo or worse because of the devastation caused by the Covid-19 pandemic, I am bullish about the opportunity for companies looking to sell franchises in the coming months. In fact, I predict the next year may be one of the strongest years ever for franchising.

Franchise companies better be prepared for the coming boom in franchise sales, or they are likely going to miss out on a once-in-a-lifetime opportunity. We already are seeing an increase in interest from those looking to buy their own franchises, and we are expecting that this will materialize as a tidal wave of franchise sales by 2021.

When certain factors are in place, franchise sales tend to climb. We are about to see a “triple witching” effect that will combine the three primary drivers: 1) high levels of unemployment at the top end of the salary market; 2) ready access to debt capital at historically low interest rates; and 3) after more than a decade of growth since the last recession, many Americans have access to substantial savings in the form of home equity, retirement accounts, and personal savings.

Other factors also will contribute to the success of these small businesses. For brick-and-mortar businesses, commercial real estate is more readily available in prime locations, and perhaps at lower rents. With so many displaced workers, staffing a franchise business may become easier than ever given the larger labor pool. Add to that the fact that politicians will be fighting among themselves in an election year to come up with the best stimulus package for putting small businesses back to work, and you have the perfect storm.

The media coverage of the pandemic has also helped shine a light on the vital role franchised businesses play in the economy. Given the current health concerns, consumers feel a level of confidence in walking into a business that is part of a larger network in terms of quality control standards, training of staff, and consistency of product. This, too, will make franchise ownership attractive for qualified candidates because these networks provide a degree of certainty after emerging from a time of unprecedented uncertainty.

For companies that have not yet developed their franchise programs, it typically takes at least 4 months just to get the needed documentation in place, starting with an analysis of whether the business is franchise-able. Of course, not all businesses should be getting ready to franchise. If the business model does not work in the new economy, the focus needs to be on making the business work before even thinking about expansion. But if the business model is ripe for growth, there will never be a better time to franchise a business.

Mark Siebert is CEO of the iFranchise Group, which he founded in 1998. The company offers the skills of the nation’s top franchise experts in strategic planning, operations training and documentation, franchise marketing and sales, and best practices for emerging and established franchise companies worldwide.