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The challenges & opportunities facing the franchising industry since the Covid-19 lockdown.

The challenges & opportunities facing the franchising industry since the Covid-19 lockdown.

As with every business, industry and economy, the Covid-19 pandemic has undoubtedly had a profound effect on the franchising industry.  The new decade started with a forward-thinking outlook in the UK.  A new government with an agenda to “get Brexit done” emerged – and whether or not you agreed with Brexit – the fact is that many businesses were optimistic and had confidence in the economic outlook.  There was a noticeable increase in a wide range of sectors looking to franchise their businesses.

The outbreak of Covid-19 in the Europe and the subsequent lockdown from mid-March changed this overnight.  I remember travelling to the Franchise Expo in March on a near empty train – totally surreal but it certainly brought the situation to the fore and served as an indication of what lay ahead.

The Covid-19 pandemic brought a sudden sense of uncertainty to our lives as lockdown hit businesses hard.  Business owners had to respond quickly with sales, costs, people, and cashflow at the centre of decision-making.  Many new clients put consultancy projects on-hold and clients in the process of developing franchising programmes evaluated their franchising plans and timescales.  However, some businesses in recession-proof industries or those experiencing sustained high demand took the decision to continue their franchising strategy.

Our role as consultants, offering ongoing advice and support to clients remained our focus but with a change in emphasis to providing a resource for guidance on to how best support franchisees through the pandemic both financially and operationally and how to innovate and exploit opportunities to pivot their businesses to continue trading.   Clients contacted us for advice on a range of topics such as the government grants and loan schemes, franchise agreements, operations manuals, and franchise fees.   

There is no doubt that franchises experienced strength through their network and a real sense of working together to get through the challenges the pandemic continues to present.  It is also noticeable that franchisors have used lockdown as an opportunity to reassess operations, technologies and maybe to make improvements to their business models.  Online ordering and delivery options are an example of solutions that franchisors have evaluated and on which we have provided our input.

The last three months has seen the emergence of the “new normal”.  Businesses of all shapes and sizes have adapted to the new trading environment and are eagerly anticipating the easing of lockdown and assessing the opportunities moving forward. 

This has to led to a new optimism in the franchise industry.  The core obligation of franchisors in providing support and guidance to franchisees and the strength of a branded network are seen as having genuine value to businesses across all sectors versus independent operators.

The result is now a significant increase in enquiries from businesses looking to franchise and to scale-up.  Businesses have used lockdown to develop new strategies for growth and for some, that means franchising.   Particularly apparent is businesses in recession-proof or high demand sectors considering franchising as a route for expansion.  In the fast-paced Covid-19 environment, new opportunities for franchising are resulting in new optimism. 

Finally, the other change that existing franchisors are experiencing is a substantial increase in franchise enquiries.  This is driven by people evaluating their work / life balance, the threat of redundancy or simply deciding it is a great time to follow dreams and become self-employed.  The future of franchising is undoubtedly healthy and a new confidence in the future is now emerging.   

Charlie Dickson BA MBA, Franchise Consultant,

Ashtons Franchise Consulting

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