Once the dust settles: What to ask franchisors in the post-pandemic environment

Franchise seekers have a whole new set of considerations thanks to the pandemic. COVID-19 has affected just about everyone everywhere, and that includes franchisors. Many stepped up big time and ushered their franchisees through the storm. Most changed the way they do business in one way or another. Aspiring franchisees looking for new opportunities have even more to think about before investing in a brand. Here are a questions to consider before you decide on a brand.

How did the franchisor’s corporate team react to the pandemic? Support is one of the biggest benefits to franchise ownership. In the heat of the pandemic, it was more important than ever and the crisis was the greatest test of a franchisor’s support. When looking at a brand, you’ll want to understand what kind of help was given. How was their communication and guidance around the federal stimulus funding programs like PPP? How many franchisees were able to qualify and receive funding help? Did the corporate team keep people calm and give direction?  Support in these key areas have made a world of difference for franchise owners.

How did franchisees respond to each other? Strong collaboration between franchisees benefits a brand in many ways. Even though some states and various cities have different regulations, franchisees of a particular brand essentially run the same business and can support each other. A company culture that includes open communication and the sharing of ideas benefits all involved. It is an important intangible to look for in a franchise system.

How has the economic model shifted? Because of social distancing restrictions, more innovation happened in the past six months than possibly the past six years. Franchisors who adapted quickly were the big winners. When looking at a brand, ask if the pandemic caused the business model to change with new methods of operation such as improved delivery or takeout, remote service or curbside pickup. Were those changes temporary or did they improve the system for the long haul?

How many franchise units closed due to the pandemic? In a typical brand that’s mature, there are units that leave a system for any number of reasons. But the impact of the pandemic put many out of business. It’s important to know the number of closed units that were caused by the pandemic. Was it serious and significant, or not too bad? Was the business deemed essential in the shut down?

What is the public’s post-pandemic perception of the brand? From the way the company gives back to its community, to how it treats employees and customers, these factors were all magnified by the pandemic. Before you invest in a franchise, you’ll want to know how the public views it—good and bad. It’s important to understand how a brand’s products and/or services are perceived by customers. Has the pandemic caused any serious shifts in customer attitudes towards the brand or its offerings?

How did competitors respond to the pandemic? Take a look at franchises in the same category. Did they respond better or worse? Did they respond differently? Compare and contrast those reactions from others in the category to see if you’ve got a winner or if a different brand might be a better choice.

Are there any structural changes to the agreement? Some brands have had to add new fees and structures because of the pandemic. Find out what changes were necessary and how they were they implemented. You will want to know if they will remain in place after things go back to “normal.”

Generally, strong franchise brands have become stronger and will thrive in the long run because of the challenges the pandemic has presented. Weak brands will show their flaws and may not survive—or will be forced to make significant changes to forge ahead. Perhaps the most vulnerable are independent business owners. Without the support of a franchise system, they had to figure it all out alone through pandemic and are still facing serious challenges by themselves. In the long term, franchise businesses and franchise systems will generally fare better through any crisis. After all, there is strength in numbers.

Franchising is a team effort and you want to be with a winning team. It’s so important to do your homework before investing in a brand. There’s a lot to learn and a lot to look at. The more you know, the better decision you’ll make. Take the time to do your due diligence and visit (in person, by phone or virtually) with many other franchisees who are in the system already. They will give you a real feeling for what the day-to-day challenges are. Franchises might be easy to get into but they can be difficult to get out of. There are many great opportunities out there, and for many reasons, this is the best time to get involved.

 

John W. Francis has more than 30 years in franchise industry, as both a franchisor and a franchisee with multiple brands. Contact Johnny at john@johnnyfranchise.com or check out his website at  www.johnnyfranchise.com