Franchise Sales During a Recession
I often take a look at some of my posts from years back just to compare my thoughts and perspective from then to now. I always ask myself if I’m consistent so as not to confuse anyone. But more importantly, am I focused on the long-term or just on the here-and-now?
Well, below is a post from June 2009. Upon reading it, I’m sure you’ll agree that I have been consistent and have not jumped on any flavor-of-the-day bandwagon…
It really is about fundamentals and best practices, along with the willingness to think beyond what had been perceived as the norm. And like the great recession of 2008–2009, the looming recession (or period of economic uncertainty) will require similar focus.
Franchise Sales During a Recession
In one of the franchise groups on LinkedIn, there was some discussion about a Wall Street Journal article, “Franchise Sales Pull Back During the Recession.”
Several franchise professionals posted their comments and, of course, I added my “two cents” as well. Okay, I was definitely long-winded compared to the others, but as most of you who read my articles are well aware, I have a passion for franchising and franchise success and tend to go on and on to share the same with all who will “listen.”
Having worked in franchising through several recessionary periods, I strongly believe there are many well-qualified candidates who will be exploring franchising through today’s challenging times. Some will do so as a career alternative or transition, and for those already a small business owner, they may look at franchising as a business expansion strategy. And whether as a current or aspiring entrepreneur, more than ever before, many will view franchising as a way to diversify income.
No doubt, the number of franchise leads has started to drop. But I believe it’s because many of the “tire kickers” have gone by the wayside while the more qualified candidates continue to search, inquire and ultimately decide franchising is right for them to achieve their goals and objectives. The cream is rising to the top. However, in order to fully capitalize on this trend, franchisors must realize that the candidates’ approach has evolved and act accordingly.
Today’s franchise candidate is more qualified, sophisticated, educated and technologically advanced than we have ever seen before. Add to the mix, a sense of extreme caution, and their process in exploring franchising and specific franchise opportunities is evolving to more of a detailed, well-thought-out and planned strategy — essentially, due diligence 2.0.
Always understanding that there is risk in any entrepreneurial endeavor, today’s candidates explore franchising because it may provide even the slightest edge against failure. Their mantra has become, “failure is not an option” and they now live it by doing everything humanly possible to dot every “i” and cross every “t” and then rechecking only to do it over and over again until they have full, complete confidence in their decision. They’re quickly becoming experts at due diligence.
To that end, the overall process from initial inquiry to franchise award will be much longer than in years’ past and that is something franchisors must be prepared to effectively handle. It’s a primary reason I believe social media and digital tools work so well in the new era of franchise sales as it creates an environment for today’s candidates to research organizations, share information, communicate with individuals at all levels of the franchise organization from franchisees to corporate executives, view photos, audio and video, etc. And, they can do so at their own pace and to their full understanding.
Understanding and adapting to today’s qualified franchise candidate and their evolving propensity toward extreme due diligence will help franchisors ride out this current economic downturn. Putting their heads in the sand and just complaining about the poor economy and the franchise candidate pool drying up will only prove true that their negative thoughts are correct. But that doesn’t need to be the case. Diligence on the part today’s franchisor is paramount, just as it is for today’s franchise candidate.
All that being said, certainly there will be challenges in securing financing and other variables that must be contended with and addressed accordingly. But as the franchise candidate pool recedes and many of the tire kickers aren’t around to waste our time, franchisors will now have more time to explore options, use creativity and innovation, network beyond comfort zones — all to seek out alternative solutions. I believe outside-the-box solutions are out there and many franchisors are capitalizing on them as we speak. They will not only survive, they will thrive as other franchisors have done in other recessionary periods.
If you need some additional information regarding franchise sales during a recession, I refer you to an article by Keith Gerson, President of Franchise Operations at FranConnect that was republished at Franchising.com. The article is titled, Recession Predictions for Franchising in 2023 and may be accessed HERE.
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