Language: English

23 June, 2021

TRENDS SHAPING THE FUTURE OF FRANCHISES IN 2021

With the advent and maturation of the internet, such things as brick-and-mortar retail operations seem to be fading in popularity as people order products and even groceries online. Books are delivered via the mail or downloaded to a tablet, and with the pandemic, eateries are shutting down in droves. Such things as digital consumption of delivery of goods and services and the growing need to maintain social distance can wreak havoc on established business models that involve such things as franchising. However, franchising itself is not a business. It is a type of business model. As such, franchising is alive and well, as they say, even if it is undergoing various transformations.

1. Health

Perhaps because of the sudden emphasis on remaining healthy, franchises that focus on a combination of health and wellness are expected to thrive throughout 2021 and beyond. Franchises that focus on exercise and spa experiences are expected to do well, as are those that focus on such high-tech markets as bio-hacking. Finally, franchises that offer sports therapy are expected to maintain high popularity for people who can position themselves within this niche.

2. Learning

The pandemic has pounded schools, and a healthy segment of parents is not interested in returning their children to an environment where they can ultimately carry a virus back to the home. As such, home-education and parent-teaching franchises are expected to gain and maintain popularity.

Specifically, franchises that provide exceptional learning aids and online learning solutions are beginning to thrive and are expected to be among the top performers of 2021. Tutoring franchises are also expected to experience increased popularity as some teachers are not expected to return to the classroom. Although this shift from a traditional educational environment to a home-school environment will not entirely disrupt educational institutions, the shift will be significant enough to provide double-digit growth and profits for various learning-based franchises that also include the following.

  • home gyms
  • self-defense
  • computer programming camps

3. Eateries

Although franchises that rely on an eat-in or sit-down experience are increasingly becoming common casualties of the pandemic, wheel-based restaurants or eateries see double-digit growth. Serving such fare as submarine sandwiches or pizza, hot-food vans are becoming valuable investments to anyone wanting to launch a franchise.

Additionally, these small operations are more successful than a typical brick-and-mortar restaurant as the overhead is substantially lower. Consequently, in terms of market, food-delivery franchises can easily become a mainstay business for small towns that could not otherwise support a location-based business.

4. Technology

Although few franchises center around a technological product, franchises relying on existing technology to increase sales helps establish a back-to-basics formula for doing business. For instance, video conferencing is being used successfully by gyms and paint companies needing to provide customers instant quotes. Franchises that center their deliveries around an app are also experiencing a more consistent uptick in their sales. Finally, virtual conventions are becoming so popular that even when in-person attendance is once again commonplace, virtual seats will likely still be an option.

5. Relief

One of the most important needs for an existing franchise is to receive assistance from the parent company until the pandemic is better under control. This assistance might involve deferred franchise fees as the ability to pay these fees is a real concern for franchises experiencing fluctuating levels of revenue that do not adequately meet a fixed-fee system.

Additionally, leadership by the franchisor should include measurable problem solving to meet the new needs of product or service fulfillment. Some solutions involve converting counter service to drive-thru windows. In fact, many food-service franchises and even junk-retrieval franchises are attempting to re-think their delivery system and implement so-called no-contact fulfillment methods to ensure customer safety.

6. Use of social media to advertise community accountability

Especially for consumers in the age range of 20 to 30, corporate ethics and morality determine factors that help people decide what to buy and from whom.

In fact, to franchises that donate to charities or help protect the environment, such buyers are increasingly loyal. Additionally, franchises that actively recruit a diverse workforce and implement non-harassment policies will increasingly attract better employees. Finally, in terms of reaching such consumers, franchisees and franchisors are increasingly attaining better market penetration by sharing their stories of community accountability via social media.

7. Viable supply lines

The most successful franchises will continue a long-proven strategy to heal the environment while making current franchise operations more environmentally viable. Doing this involves using green energy and products, but the most important factor in this strategy is doing so in a manner that makes supply lines more efficient. This combination is compelling because social responsibility attracts more customers while the more sustainable supply line serves them. Consequently, even non-green franchises can see huge profits by making small changes in their production or delivery processes.

8. Protection against the pandemic

Pandemic-safe franchises encourage social distancing, but many travel franchises have social distancing built into their business models. For instance, various RV and campsite franchises are experiencing amazing growth as people are attempting to overcome the stir craziness that sets in during quarantine. To remain safe, many family and friends are exploring nature via travel trailers and recreational vehicles. The destinations are away from the city and toward the vast outdoors of rural America.

9. Diversity

Multicultural franchises will likely have a better chance at launching and thriving than non-diverse opportunities. This trend is because a broader cultural consciousness is evolving and the fact that people finally recognize that multicultural markets are largely untapped.

In particular, franchises that can tap into the desire for ethnic cuisine while helping the environment and maintaining strategies to keep people safe from the pandemic will likely thrive throughout 2021.

10. Home renovation and delivery as essential services

In practice, serving an essential need involves the end product, which must be critical to the buyer’s situation. Food, for instance, is essential. However, it also involves delivery, which means how the product is fulfilled.

The franchises predicted to thrive will follow pandemic-safe delivery methods. The best businesses that focus on the home renovation while accomplishing pandemic-safe delivery methods will trounce the competition.

Top 10 Statistics

  1. The top two franchise industries outperform all others combined – For 2021, the top two franchise categories are personal care and travel. Personal care is projecting a rate of growth of 111 percent. Travel is projecting a growth rate that should range between 214 percent and 318 percent.
  2.  Travel equates to the low competition – Restaurant franchises are the top attraction for anyone interested in opening a franchise. However, they are only projecting a growth rate of 28 percent. Conversely, only three percent of new franchisees open a travel-related franchise. However, as noted above, travel franchises are slated for triple-digit growth. Consequently, you will likely have less competition and more growth with a travel-related business.
  3. Size depends on the definition – The largest franchise in terms of revenue is McDonald’s. It currently brings in an average of $1,800,000 gross profit per restaurant. With over 38,000 restaurants, the franchise is the top earner on the planet. In terms of the number of restaurants, Subway operates over 41,000 locations, making it the most common eatery on the planet.
  4. Elite – The total number of franchises in the United States tops out at approximately 750,000. Another way, the number of people in America who own a franchise is approximately .002 percent.
  5. Top franchises are food – Although you can buy into any industry, out of the top-10 most profitable franchises, seventy percent are in the food industry.
  6. Real estate – Home-selling franchises are still taking a beating after the 2020 pandemic. In total, the average brokerage can expect a loss in revenue ranging from .7 percent to 2.6 percent. For franchises like RE/MAX, this loss totals $71,000,000. That said, pending contracts have increased by 16 percent, meaning homes are, indeed, selling, but they are selling for lower prices.
  7. Just shy of a quarter-million – Although there are many low-cost franchises that you can start for approximately $10,000, the average actual cost to open and successfully launch and maintain a franchise ranges between $50,000 and $200,000.
  8. Average net worth – Being able to afford to buy into a franchise is only the first financial obstacle a franchisee will face. The most significant is attaining sufficient net worth to ultimately be approved to purchase a franchise license. In fact, the average net worth of a new franchisee ranges between $30,000 to 300,000.
  9. Average salary – The profit a business makes is much different than the salary a franchisee owner pays him or herself. Profit must be partially put back into the business to grow it adequately. Of course, the other part of the profit will go to overhead, which includes employee and owner salary—the average salary for a food-related franchisee peak at approximately $120,000 per year.
  10. Uncharacteristically high survival rate – For new businesses, the overall success rate is approximately 15 percent, which means one in six will eventually go under. However, this performance reverses itself for a franchisee. The average success rate levels out at approximately 90 percent, meaning that there are very few setbacks a franchisee will experience severe enough to cause the business to fail.

Source: https://linchpinseo.com/

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