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While this certainly isn’t the best of times — particularly for franchises — nor is it the worst. If I had to label the economy as we move toward a new calendar year, I’d offer the word “interesting.” Regardless of characterization, it is without question a time to regroup, redirect and recommit — not least because contradictions seem to rule the data.
Understanding Unprecedented Dynamics
In assessing this strange past year, the New York Times reported in October, “The unemployment rate fell, but the labor force shrank. Job gains slowed, but wage growth remained high. The (jobs) report mostly met analysts’ expectations, yet the stock market tumbled.”
There has also been a rise in the number of warehouse workers, yet restaurants and healthcare facilities are struggling to find (and keep) staff. A lack of reliable child care has forced many employees (mostly women) to settle for part-time and often lower-paying jobs with fewer benefits. And everyone thinks they deserve a pay raise.
There are some silver linings, however. Wide acceptance of vaccines means that as we move into 2023, working from home will be less prevalent (although still desirable), which is good news for companies that service downtown workers. And even cautious people are returning to shopping and dining in person.
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The irony is that while conventional wisdom tells us to batten down the hatches among the neon signs that the economy is slowing down, a recession (looming or full-on) is actually historically good for franchising companies. When large corporations lay off people or facilitate early retirement, the targeted workers are often too young or too motivated to stop making a living. The opportunity to work for themselves, to grow their own business is an appealing option, and franchising offers them that.
As we start a new year and further distance ourselves from pandemic shutdowns, growth should be on every franchisor’s mind. That said, growth for growth’s sake is not a viable option in “interesting” times, and neither is a haphazard approach. Potential franchisees have been through an unsettling period and are looking for stability and support, which is something a franchisor with a solid team and proven concept can reassuringly offer.
Where to Look for Growth
Before building a larger pipeline of candidates, make sure your franchise manuals and marketing materials are both up to date and compelling, and that support staff and sales reps are trained and incentivized. This is also the time to hone your “elevator pitch,” which in part defines what differentiates you from other franchises in the same field. Make a list of strong suits: what makes you unique, and especially any advances you have in technology (going forward, innovative and labor-saving tech will be a game-changer in attracting sophisticated franchisees).
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This is also the ideal time to take an honest look at your systems and messaging and shore up any weak spots. Re-evaluating the budget and reassessing targeting methodologies are effective ways to punch up franchise marketing and produce a lean and focused message, as opposed to a general one that often can feel “flabby.” To do this, you’ll need more than guesswork: Do the detailed research needed to identify tactics, places to target and candidates to seek. Also look for online sources (such as entrepreneurial sites and industry-specific hangouts) that an ideal candidate might frequent — ideally ones not already saturated with competitors’ advertising messages.
Note that there is a cost to finding good, qualified candidates. Some sources to look into (from the most expensive to least) include: prequalified leads from brokers; public relations; online/digital media leads; and leads from referrals.
Each of these has a different price tag and varying degrees of effectiveness. For example, a flattering news story or feature about your concept may attract leads (and provide credibility), but not at the same rate as the internet can generate. Plus, attracting attention from the media usually involves using a public relations firm with a monthly retainer — so while the cost per lead may be high, so too may be the close rate.
We’ve found that in order to generate consistent leads and ultimately consistent sales, franchisors need to maintain a smart mix of expenditures across a variety of lead sources. And don’t forget that existing franchisees also can be evangelists for the brand; potential candidates will likely ask them for their experience with the leadership team and about revenue potential, so be highly supportive and transparent with existing franchisees so they are both successful and can represent the brand in the best light.
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No one, not even the Feds, can predict exactly how the economy will play out in 2023, but if history has taught us anything, it’s that uncertain economies work in franchising’s favor. So, whether you choose to stay the course with your current business structure and growth strategy and simply look for ways to improve or plan a more dramatic change in the overall strategic direction, it’s all a matter of consistently working on offering, systems, messaging and culture. Sure, we all want to attract interest, but it should be done with, as Charles Dickens put it, “…the habits of punctuality, order and diligence,” along with ample forethought, planning and guidance, until these interesting times transition to a new and hopefully stable norm.