It seems odd to believe that now would be a good time to expand a business through franchising, considering we are just on the other side of 2020 and all that came with it. However, there is good news to be had for franchisors. Several factors support the idea that 2021 may be the best year yet to franchise a business, here are three of the top reasons to consider.
Plentiful Prospective Franchisees
There is no disguising the fact that 2020 was a difficult year for many. Some industries crashed completely, but others found their true footing – thriving amidst the changing requirements in operations and consumer trends.
More than 22 million Americans found themselves professionally displaced last year. It is the kind of curveball that makes someone stop in their tracks and reflect on their professional future. The franchising industry provides something for everyone, from owner-operator concepts with initial fees of $10K or less, to area-management opportunities for investors. People have found themselves – expectedly or not — looking for opportunities in 2021, so make sure they see yours. They are finding out that their jobs no longer exist and therefore they need to shift their focus to other ways to make a living. Owning their own business, typically a franchise, is the best way to accomplish this.
Money is Cheap
The Small Business Administration helped to distribute more than $349 billion in emergency funds for businesses last year via the Paycheck Protection Program. Despite this very important distraction, the SBA stands ready to assist with loans for up-and-coming business owners. Prospective franchisees should seek out financial institutions who specialize in franchise lending, but however they seek funds – term, SBA or otherwise – now is a perfect time to do so.
Interest rates continue to be low for money borrowers. According to Bankrate, neither the coronavirus vaccine nor the new Biden administration will budge the current rate much, which stands at an average of 11% for personal loans and between 6% and 8% for business loans. Banks will compete in 2021 for applicants with good credit. More than 44% of Americans took out a personal loan in the last year, nearly 10% of those were for the purpose of starting a business.
Low rates are good news for both prospective franchisees and the franchisors who want to award them units within their systems.
Franchisors Have Proven Themselves
What is arguably a leading benefit to investing in a franchise system is the idea that a business builder can go into business for themselves, but not feel like they are by themselves. Franchise support plays a key role in the discovery process and may even be the tipping point that helps a prospect decide if a certain concept is a good fit.
Weathering the storm of 2020 is proof positive that a concept has what it takes to be flexible and adaptable to economic circumstances. This is the time for franchisors to shore up their presentations and reflect how sustainable their concepts truly are. For timid potential franchisees, this kind of reassurance will go a long way. There is yet another benefit for bricks and mortar franchise opportunities: a wealth of vacant retail space. Landlords are desperately looking for new tenants and giving them incredible deals. This bodes well for retail franchisors, including restaurant franchises.
So many aspects of daily life remain uncertain, but expanding your brand does not have to be one of them. A plentiful professional workforce, excellent interest rates, available real estate and strong franchise brands together create an attractive four-fecta of opportunity within the franchise space in 2021.