Despite the economic uncertainty this year, franchise sales remain strong in the U.S. Many see franchising as an investment opportunity right now because historically, franchising has performed well when the economy is trending downward. Here are some of the trends in the franchise market and what you can expect moving forward.
An Increase in Sales Leads
Sales leads are high right now, in part due to economic uncertainty. Entrepreneurs and those considering a franchise have been saving more than usual because of the economic confusion brought on by COVID-19. Many of these entrepreneurs will want to buy franchises with the money they saved because they recognize that opening a franchise is a smart investment. Those willing to take a risk can reap great rewards at time like this. The franchise market is expected to remain strong throughout the remainder of 2020.
Credit Line Accessibility
During the recession of 2008, credit lines became difficult to access. This caused the franchising market to take a hit, which was atypical for a recession. Even though we are currently experiencing an economic downturn, the credit market remains steady. For this reason, franchises are expected to perform better in the current economic environment since entrepreneurs will still be able to attain the credit lines they need to invest in franchises.
Restaurants and Retail Stores
Not surprisingly, the COVID-19 pandemic hit the retail and restaurant industries harder than it hit other franchising areas because so many stores and restaurants had to temporarily close their doors. Legacy brands have suffered the most because they tend to have the hardest time changing their operations and marketing strategies. Emerging brands can adapt more readily, which allows them to rebound faster. Meanwhile, fast casual and takeout restaurants are rising to the top since they have been able to stay open during the quarantine.
Home Healthcare Market
One sector that has fared well over the past few months is the home healthcare market. Home healthcare—both medical and non-medical—have thrived during this period because many patients are reluctant to make the move to Assisted Living Facilities right now. Home healthcare franchises are already used to maintaining strict safety standards, so they haven’t had to reinvent the way they operate. These brands are doing very well right now and will likely continue to do well as more and more people experience firsthand the advantages of home healthcare.
While the franchise market is expected to thrive this year, some areas will weather the recession better than others. Businesses like fast-casual restaurants with existing Take-Out track record and home healthcare have a clear advantages over dine-in restaurants for example because they never had to cease operations. Overall, sales leads are expected to rise steadily in 2020.
by Nancy Estep
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