the franchising landscape during the pandemic


Economic predictions indicate that the COVID-19 pandemic will result in a global recession of massive proportions.

Businesses of different shapes and sizes across various industries have been impacted in more ways than one. Many retail stores and restaurants have shuttered their businesses, and most others aren’t sure if and when they would be able to open up again.

The crisis is far from over, and the cloud of uncertainty hangs over everyone’s heads. Some market watchers say that businesses that have been shuttered for over three months will not hold any relevance for consumers even if they open a few months down the track. It means they will struggle to open up and become viable after the pandemic. If you are a franchisee and are wondering how to navigate these turbulent and unchartered waters, read on.

How Has the Franchising Space Been Affected?

Franchising has been affected in numerous ways. Here we take a look at some of them:

  • Those in the hospitality and non-essential retail industries are feeling the heat the most, and they have seen their sales decline drastically over the past few months.
  • Many franchisees have seen their supply chains being impacted, especially the ones that have been sourcing materials from countries that have shut down their borders.
  • Certain franchisees have been relying on force majeure clauses in their franchising agreements to terminate their business relationship. There has been a distinct shift in consumer demand from leisure and retail to panic-buying of food and groceries.
  • Supply chains are unable to handle these stresses, and specific delivery models are crumbling under pressure.

Does It Make Sense To Invest in a Franchise Now?

The thought of embarking on any business at any time can be quite daunting. However, in the wake of a global pandemic, it can be no less than terrifying. There is uncertainty in every industry and most people that had plans of investing in a franchise a few months ago, have been frozen into inaction. But some people are making bold moves and are still forging ahead with their plans.

They may not invest in a franchise right at this point. Still, they are using this time as an opportunity to scope the market, learn more about different businesses and are checking how various franchise networks are faring and managing this highly challenging situation. The business space isn’t for the faint-hearted, and if you want to find out how far you can go, you have to be willing to take some calculated and well-planned risks.

An entrepreneur is one who is willing to live with risk and one who always sees possibilities. In the wake of the pandemic, many global and national companies are laying-off or furloughing employees. This goes to show that when faced with unprecedented circumstances, even something as seemingly stable as a 9-5 job isn’t that way any longer. If you had been considering stepping into the franchising space before the entire world went topsy-turvy, now is the time to firm up those plans.

Why Invest Now?

Investing in a franchise is very different from other businesses; in the former, you take a calculated risk, and will also find plentiful opportunities. But does it still make good business sense to invest in a franchise amid a crisis? The answer to that is yes – in this landscape, you can gain far more insights than stable times. There’s a bright side of franchising during COVID-19 times. It’s quite rare to find the opportunity to see how various businesses reacted and fared when it truly counted. There are numerous reasons to buy a franchise in these troubled times and ways to get started in the current economic setting. Let’s look at some aspects:

1. The Workforce Is At a Pivotal Stage

As mentioned, many companies, big and small, are on shaky ground and are either letting people go or are benching them. If you suspect that your job is in jeopardy, landing another one will not be easy now or in the near future. The competition will be incredibly fierce. In June, The Guardian reported that Australia lost 227,000 more jobs, taking the unemployment rate to 7.1%.

As if that did not seem disturbing enough, the latest reports on SBS News state that the country’s unemployment rate is expected to reach a peak at 9.25% in the December quarter. It means that another 240,000 people will be out of work by the end of 2020. This trend is a terrifying one, and the uncertainty that looms ahead is going to have far-reaching effects for years to come.

Many people that still have jobs are following social distancing norms and working from home. They have come to realise that the 9-5 lifestyle they considered ideal wasn’t that way at all. In the current scenario, franchising might just become that life-changing option to change your career track, and gain some flexibility and higher earning potential.

It’s a Safer Way to Venture into the Business Realm

Starting on any business from the ground up can be incredibly risky. But franchising is different. In this business model, there is a proven concept which provides a certain amount of security. The franchisor will have already gone through the various trial and error processes and invested in marketing, setting systems in place and branding.

No one can guarantee success, but this might be the time to take the plunge into the franchising waters. You would be able to determine now whether the business is pandemic and recession-proof.

Being the owner of a franchise has distinct benefits. This business comes with resources, and some teams can help with support training, business development, marketing and legal issues. When you start to look, you will find there are thousands of franchised businesses in Australia. So how can you find one that will work correctly for you?

Though the current landscape may not be perfect for trade shows and fairs, some events are slated to be held as planned. For example, the Franchising Expo Melbourne is to be held in August. These are the types of events where potential franchisees can interact with entrepreneurs, franchisees, and industry associations.

You can also take this time to conduct online research and some groundwork. Find out which businesses have managed to stay afloat through the pandemic. Determine how they have altered and adapted their businesses to the changing times and continued to conduct business. Visit franchise portals and the FCA website.

You will find a slot of relevant industry-related information and updates here. If you had begun research before the pandemic breakout happened, contact some franchisees now and see what they have to say about their business and how the company is weathering the storm.

Vet The Franchise Network By How It Has Responded To The COVID-19 Crisis

People never forget how they were treated when times were tough. The pandemic has put franchisors through the ultimate test. As mentioned, contact some franchisees in the system and ask how their experience has been. A good franchisor will have made pivots and changes to keep their business going and need to bring their leadership qualities to the fore in the current landscape.

They will have communicated regularly with their franchisee partners, helped with relief funding and sent updates on the pandemic situation. This is the ideal time to determine whether a particular franchisor fell flat or stepped up to the challenge. You will get a clear picture of how support looks with a specific brand.

You should consider becoming part of a franchise that is innovative, resilient and provides support to keep the business moving. A franchisee in a stable and sound system will never be left alone to find their way around. There will be teams to support them. It’s why franchising may be the way you can take advantage of this solid support when starting your business.

It’s one of the best ways to hit the ground running. Even if you are unable to invest right away and buy a franchise, all the groundwork you conduct today will help you get started quickly once the crisis blows over. It will also give you a lead on others that might be considering franchising options at that time.

If you want any more information on how to get started in the Franchising space even during these difficult times, you would need some guidance. Feel free to contact the experts at The Franchise Institute. You can call us on 1300 855 435 or fill-in this contact us form, and one of our experts will contact you as soon as we can.

Thanks for reading,
The Franchise Institute Team
1300 855 435


Stats References:

Post A Comment

Leave a Reply

Your email address will not be published. Required fields are marked *