The Impact of COVID-19 On Franchising: The Best Franchises Are Bought, Not Sold
COVID-19 has made an indelible mark on the way businesses of all sizes operate and will directly impact the way franchise brands are bought and sold moving forward.
In many ways, the pandemic is like a once-in-a-lifetime hurricane that devastated the entire country. Despite the devastation, we recover from hurricanes, and we will recover from COVID-19. The weaker franchise concepts may not survive, just like many homes and buildings that were weak and vulnerable did not survive hurricanes. The strong franchise brands will become stronger, and new brands will emerge from the ashes to capitalize on new business opportunities in the market.
The way franchise buyers evaluate and select franchise brands will also change. Buyers will be more deliberate, less impulsive, and hungry to find specific characteristics about the brand to help navigate their decision-making process.
As the CEO of one of the leading franchise marketing agencies in the country, I have provided marketing services to more than 150 franchise brands over the past decade. Based on that decade of experience, I have identified five key characteristics that the best franchise brands possess:
The best franchise brands should possess these five characteristics:
- The franchise has a transparent / high character team.
- The franchise has a clear brand position.
- Is this a baby business or a small business?
- The franchise has a vision and a plan for growth. And it is all about the numbers.
- The franchise has a robust operations and marketing system in place to ensure your success.
It is as simple as this - successful franchise brands are a direct reflection of the character and collective talent of the leadership team. The best management teams are senior level, with proven success running successful brands.
Successful companies insist on everyone in the company being authentic, honest, and transparent with employees, partners, and franchise candidates.
They are confident and profitable enough to shoot it straight with you if they are not a good fit for your future aspirations. Not only can they articulate their competitive strengths and weaknesses, they are not afraid to be transparent with prospective franchisees about the investment, the earnings potential and their market position based on real data.
Successful franchisors understand that to create a strong brand identity, you must stand for something. For example, you cannot build a beef jerky outlet brand and be concerned about what vegans may think of your brand messaging to meat lovers.
The best franchise brands have a strong brand marketing vision backed by consumer research and the financial resources to bring it to life and convert it into a national powerhouse.
As Newt Gingrich famously said, “there is a difference between investing in a small business and a baby business.” A small business is self-explanatory. A baby business is a small business concept that will grow into a larger, scalable brand given the right combination of talents and resources.
If the franchise brand has stalled or plateaued, you should consider if this is due to inherent weaknesses in the overall brand concept, the management team’s skill set, or its propensity to invest enough in the brand to fuel future growth.
Does the brand have a clear vision of not only company success, but also what your future success looks like? Do they have a comprehensive, data-validated growth plan with clear goals, metrics, and timelines?
Great franchise brands are all about data analytics, including having a firm analytical grasp on the customers you will be counting on to drive profitability in your new business. They have proven data about your future customers; including how many are in the territory you will be securing, their online and social media behaviors, what messages they respond best to, etc. They also have analyzed the same data for their top competitors.
You are evaluating franchise opportunities because you want to leverage a proven sales, marketing, and operational system versus starting a company from scratch. To me, it comes down to three things:
- First, the talent of, and the chemistry you have with the franchisee operations support team.
- Second, the marketing resources they have on staff and the marketing agencies they have under contract.
- The third leg of the stool comes down to the operational and marketing technologies they deploy across the system to ensure your unit level economics.
Good luck on your exciting and perhaps scary journey to determine the right business investment for you and your family! I hope that my franchise marketing experience has given you some insight into buying – versus being sold - on the right franchise brand for you.