Franchise Growth Expert Brent Dowling

One of the top franchise growth questions we’ve been getting at Raintree over the past few months is, “We’re in the middle of a pandemic- is now really a great time to franchise?”

And people are always shocked when we answer with a resounding YES!” 

We get it- on the surface, 2020 seems like it would be a difficult year for Franchisors to concentrate on driving franchise growth, especially since many businesses have fallen victim to COVID-19 and have been forced to lay off employees or shut down completely. However, this economic uncertainty is precisely why Franchisors are currently seeing a massive increase in inquiries from prospective Franchise Owners.

As people find themselves out of a job due to a COVID-19-related layoff or company shutdown, they are looking for new career opportunities that put them in greater control of their own financial destiny. For these people. the prospect of business ownership through franchising means an exciting opportunity to take their income into their own hands. This significant upswing in franchise inquiries over the past quarter leads some industry experts to predict a banner year for franchise growth in 2021. 

Raintree CEO Brent Dowling was one of several experts in franchise development who weighed in on the subject in a recent article in the Denver Business Journal, joining Raintree clients Seth Larsen of Cheba Hut and Michael Haith of Teriyaki Madness to discuss the highly promising future of franchising in a post-COVID world.

First and foremost, it’s important to remember that not all businesses have taken a severe hit as a result of COVID-19, and, in fact, companies in some industries are currently reporting higher-than-average revenue for the second quarter of 2020. A brand’s success under these circumstances is largely dependent upon its ability to pivot its existing business model to meet the new demands of consumers and comply with state safety recommendations and requirements.

As a company that already made 65% of its revenue from off-site sales pre-pandemic, Teriyaki Madness was already extremely well-positioned to offer no-contact service, which Haith says has led to booming business. In addition to third-party sales that have increased by 8% since the onset of the coronavirus pandemic, Teriyaki Madness has added eight locations since mid-May. 

Haith said because Teriyaki Madness was already positioned well to offer no-contact service, sales have “absolutely soared,” adding, “Our franchisees are super happy, so they’re telling all their friends. We’re built for the future.”

Seth Larsen, Chief Relationship Officer of the Cheba Hut sub franchise, echoes Haith’s statements, citing a 15% to 20% increase in franchise inquiries along with the grand opening of three new locations during the pandemic, ‘Now that’s hustling for Cheba Hut.”

Additionally, while the unprecedented nature of COVID-19 has caused casual dining restaurant franchise sales to slow in the first part of 2020, a number of franchise development experts believe that 2021 will bring a huge pendulum swing as consumers flock to their favorite restaurants in a flurry of excitement to return to normal activity. “The world’s going to come back to normal,” Dowling points out. “People are going to want to come back to restaurants. We have a long list of folks lined up to buy.” In the meantime, says Dowling, the abundance of affordable prime real estate as other businesses are forced to close, along with interest rates at historical lows, makes right now the optimal time to invest in a restaurant franchise. 

Of course, restaurant franchises don’t just spring up overnight- since it often takes a minimum of six to nine months to complete the buildout of a new franchise location, Dowling notes that people are looking to buy now in order to be ready by the anticipated boom in 2021.

The bottom line is this: we are in the middle of a very different type of situation than you’d expect in a ‘normal’ recession. The stock market is doing well and home values are steady, meaning that people are still able to secure the necessary funding to invest in a franchise. On top of that, money is cheap- low interest rates make it easy and affordable to borrow money. Add in the high unemployment rates among wealthier people who meet the net worth and liquid capital requirements for a new franchise agreement, and it’s suddenly a perfect storm of opportunity for franchise growth, particularly for businesses that have continued to do well during the pandemic.

In addition to QSR and fast-casual restaurant concepts that were able to seamlessly pivot to contact-free service, takeout, and delivery, service-based, largely virtual franchise businesses are also seeing a bump in interest from investors. For example, Raintree partner brand Footprints Floors is part of the recession-resilient Home Services industry and keeps overhead costs low by not having brick and mortar locations- two factors that are quite enticing for a prospective Franchise Owner. 

In the months since the onset of COVID-19, Raintree has continued to research the best ways to position our partner brands for franchise growth. Through exhaustive industry research and tireless commitment to fine-tuning our strategies, we can confidently say that we are ready to take our brands to new heights as we prepare for the promise of what 2021 brings.

Struggling to hit your franchise growth goals? Don’t rely solely on outdated, outbound marketing channels or franchise brokers as your primary way of selling franchises.

Raintree has built a comprehensive franchise development program that ensures all our brands generate leads from a wide variety of channels and platforms, resulting in more qualified candidates and lower recruitment costs. Learn more at raintreesales.com.