It’s been nearly a full year of economic doom and gloom related to the COVID-19 pandemic, a grueling slog of job losses, business closures, and rental vacancies. Add in the burden of public-health shutdowns and protocols, and it’s been bleak time for many small business owners.
Amid such a depressing backdrop of bad news, it might seem surprising to suggest a strong year ahead for the franchise industry, but that’s exactly what some experts are predicting. In fact, the fallout from the pandemic has created an environment in which multiple factors suggest the possibility of positive times ahead for franchise businesses.
In a sense, it’s a matter of perspective. High unemployment is obviously unfortunate, but suggests a large pool of available labor with varying ranges of experience and skill. A vacant storefront signifies a failed business, but also represents the possibility of new management, a new start, or a new direction.
Here’s a closer look at some of the reasons why the franchise industry is poised for big things in 2021.
Lots of labor
The pandemic has put huge numbers of people out of work, and some of them see business ownership as an appealing new direction, a way to take greater control of their employment and financial security.
Further, with many people looking for work, there is a large pool of talent to staff new franchise businesses. The pandemic has affected the employment of many types of workers, from entry-level candidates to experienced management and technical professionals. A huge amount of knowledge and talent is available in the labor market right now, and smart franchisees can tap into that pool to make meaningful hires.
Access to capital
The pandemic has led to historically low interest rates, and central banks have signaled those rock-bottom rates aren’t expected to rise until 2023. That means borrowing money for any reason, including starting a business, costs much less than it did a year ago. As a result, more people should be able to qualify for the financing they need to buy a franchise.
Other economic indicators suggest capital ought to be plentiful: the stock market continues to perform well and house prices are broadly stable, giving potential franchisees access to investment savings and significant amounts of home equity.
Franchises offer a proven model
While many people may be eager to change their life by becoming a business owner, some may be wary of starting from scratch and having to go it alone with an untested business idea. A franchise, in contrast, offers a proven model of success with training and support programs in place to get new owners up to speed and help increase their chances of achieving success.
Real estate is cheap and plentiful
It’s a sad fact that thousands of businesses have been forced to close during the pandemic, and many of those storefronts have remained unoccupied. As a result, a wide variety of potential locations are currently available to franchisees looking to launch a new business, including many with attractive rents. For some entrepreneurs, this may represent the best chance in years to open a business in a location that was previously unavailable or out of reach.
There’s pent-up demand
Once pandemic woes ease and a new kind of ‘normal’ returns, people are going to want to get back to living. After suffering badly during the COVID-19 crisis, restaurants, travel-related businesses and personal service providers are expected to benefit from a huge boom in interest as the pendulum swings away from pandemic life and we finally return to a more regular existence.
While it would be great to wait until a clear end date for COVID-19 arrives before buying and launching a franchise, business set-up times of six to nine months in some instances mean you run the risk of missing the initial rush. Serious franchisees are better served doing the hard work now and establishing themselves so they’re prepared and ready to reap the rewards once the pandemic reins are eventually removed.