The State of Franchising in a Post-Covid World

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The impact of the global pandemic has been felt in many different ways across communities, countries, companies and industries. And the franchising world is no exception to this. As we approach a post-Covid reality, what’s the state of the franchising industry?

Franchising after COVID-19 might feel like a risky or daring move. Many companies have been adversely affected by the pandemic, and are recovering from substantial losses. But here’s what you need to remember: The franchise industry is vast and varied.

For every struggling franchise operation, there are operations which have been able to adapt, thrive and grow throughout the past year. Before deciding whether or not to franchise in the current climate, you’ll need to be armed with a clear picture of the industry, and of the solid investment opportunities still available to you.

Franchising 101: What is franchising?

The term “franchising” refers to what happens when an owner of a business, or a franchisor, grants another person, or a franchisee, the right to run a business, sell a product or provide a service under the franchisor’s brand name. The franchising industry is incredibly popular, and growing by the year. In 2018, 710,000 people were employed in the sector [British Franchise Association].

What happened to the franchising sector during COVID-19?

As you might expect, the pandemic hit certain franchise types hard. Many businesses were forced to close throughout the pandemic, including franchise units, and some employees and franchisees lost their jobs or businesses as a result. Even in 2021, impacts continue to be felt, and the unemployment rate increased by 4.8% between January and March 2021 [Office for National Statistics]. The sectors most deeply affected were retail, food and entertainment, as businesses in these areas have been unable to open consistently since March 2020. 

Still, it’s not all doom and gloom. Even for sectors who have suffered under restrictions and lockdowns, unable to steadily generate revenue, comebacks are being planned and executed, from the live events sector to the spa sector to the hair and beauty sector. And, as mentioned above, some franchise operations have managed to thrive and adapt under the circumstances. 

An ever-evolving industry

The franchising industry has been growing and evolving for years, with more and more people turning to franchising as a lower risk alternative to starting a business from scratch. This evolution took a new turn with the dawn of the pandemic, as many sectors experienced declining sales and impacted supply chains. Suddenly, new innovations were required, and while some franchisors missed the mark, other franchise operations thrived.

For franchises with the flexibility to adapt, sales actually increased. For example, the online shopping sector grew substantially during the pandemic, with online purchases representing 28.5% of sales in October 2020, compared to 20.1% that February. Franchises in the delivery sector saw growth, too, with transportation and postal services provision growing by 2.5% [Office for National Statistics].

Franchisors have used lockdown as an opportunity to reassess operations, technologies and maybe to make improvements to their business models.
—British Franchise Association

Three reasons to franchise in a post-COVID world

Despite many people’s nerves about entering this brave new world, the tail-end of the COVID-19 crisis could actually be the perfect time to start a franchise. Here are just three key reasons why...

1. The creation of a more stable future for yourself

In the last year, there’s been a lot of change, and much of it hasn’t been positive. As mentioned above, one of these unfortunate changes has been the increased redundancy rate. Redundancy rates increased more quickly during the COVID-19 pandemic than they did during the 2008-2009 economic downturn [Office for National Statistics].

If you’ve been made redundant, or the risk of that happening in future is looming over you, a change of career might be exactly what you need. A shift into the franchising industry would lessen the risk of losing your livelihood and offer you a more stable future, with only 1% of franchisees in 2018 closing their franchise doors as a result of franchise failure [British Franchise Association].

2. The chance to be your own boss with the security of franchisor support

Many dream of starting their own businesses, but most people don’t see it through. Why? In part because of all the different risk factors involved. Roughly 20% of startups fail in the first year of business, and around 60% fail in the first three years [Fundsquire], but as we know, franchise failure rates are far lower.

When you make an investment in a franchise and become a franchisee, your franchisor will be legally responsible for providing you with all the training and support you need to succeed. You’ll have access to an established business model with a proven track record of success. You’ll even benefit from a built-in customer base thanks to brand name recognition.

3. The chance to work from home with an online franchising operation

Online franchising operations across the UK are booming right now, with online sales figures increasing hugely during the pandemic. A new normal is emerging in the industry, and remote working opportunities are becoming more and more common. If you’d enjoy a role in which you could work from home and be flexible with your time, an investment in a remote or online franchise could be the perfect fit for you.

As a franchisee with an online business, you’d be able to enjoy the benefits of working remotely and the benefits of an engaged and pre-existing customer pool. And, with lower overheads (no rent to pay, for example), you’d be able to feel quietly confident that your franchise would reach profitability in no time at all.

Run your own business with comprehensive training and support

The franchising sector has proved its resilience and adaptability, and it now looks set to bounce back from the pandemic. If you’re looking to make an investment and become a franchisee, there’s no time like the present. Explore available opportunities in a wide range of sectors via Point Franchise’s UK franchise directory.

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