Has COVID Destroyed the Franchise Industry or Strengthened It?
Since March, every American has changed their habits. People have been isolated from each other. Many employees now work remotely. Some businesses have closed. Every business that has survived has had to change its safety protocols. Everything has changed in the past four months.
The unemployment rate has spiked. It is now at 13.1%, the highest rate in 80 years. According to the US Department of Labor, 42 million people have filed for unemployment claims since the middle of March.
With the unemployment rate surging, many believe that now is a bad time to start a business. Historically, recessions have been great times for savvy investors and aspiring business owners to invest in franchise businesses. You don’t buy a business, for now, you buy it for the future. Running a successful business is all about planning ahead and then executing on that plan. Franchisees continue to invest in franchises.
How Franchising Will Continue To Thrive In Today’s Market
Almost every franchisor has continued to sell franchises. For a while, they substituted in-person discovery days with “virtual” discovery days via zoom.
While franchisors may be running a business as usual, they know that many new franchise candidates are afraid to start a business now. They have been offering incentives to new franchisees. These perks will expire soon and include extending the due date to open a new location.
Because of the uncertainty in the economy, many think that this is a terrible time to start a business. I disagree. Acclaimed economist Benjamin Graham said to “buy when most people, including experts, are pessimistic and sell when they are actively optimistic.”
In these uncertain times, it’s easy to get paralyzed with fear. However, if you remain fearful, you don’t take advantage of opportunities.
It’s ironic that the same things that are scaring potential investors are also great advantages to starting a new business now. For example, a high unemployment rate means that businesses have a massive labor pool to draft high-quality candidates from. With businesses closing and people losing their jobs, more prime commercial real estate will become available at low rents. If you invest now, you will be in a great position after the economy recovers.
The Multiple Advantages of Franchising
There are many advantages to investing in franchises. First, starting a franchise is less risky than starting on your own because people already know the franchise. The very premise of franchising is to provide business owners with an opportunity that is inherently less risky and has a proven track record of success.
The pandemic has encouraged more people to explore starting their own franchise business. There are now 42 million unemployed people. Many are considering starting their own business to have greater control over their lives. In addition, the fact that we’re all in lockdown means that people have all the time they need to research new business opportunities and plan for their futures.
The pandemic has created an opportunity to invest in the right franchise. Unlike previous recessions, financing remains plentiful and available. You still need to do your own due diligence to make sure that the franchise is the right opportunity for you.
The last few months have been hard. The pandemic will end and the world will return to normal. We have no idea when it will end. Until then, we should focus on the positive, including new business opportunities. Let’s take advantage of these opportunities.