COVID-19 and Franchising: Seven Months In

It has been more than seven months since the coronavirus pandemic began. Although the business world has been upended, there are signs of improvement and resilience.

Many entrepreneurs have capitalized on the recession and the low entry barriers that it has created. Optimism among current business owners is growing, with owners expecting conditions to improve as our recovery continues. Applications for new businesses are at their highest point in over a decade, per data from the US Census Bureau and Federal Reserve.

While we’re beginning to see evidence of small business recovery, most of the available data is from the downturn. Leading market research firm FranData recently published an in-depth analysis of COVID-19’s impact on franchise businesses. Here’s a high-level view of their findings:

Capitalizing on Opportunities

At a glance, the data might seem pretty grim, but if you dig deeper, there is a much more positive long-term outlook for franchising. Per FranData’s impact analysis, franchise businesses are expected to outperform independent businesses as our economy recovers, thanks to the resources and support of their franchisors and the broader franchise community. Additionally, the International Franchise Association (IFA) has been fighting for business owners’ interests in Washington, and pushing for franchise-friendly policies throughout the pandemic.

Downturns present unique circumstances and business opportunities for entrepreneurs. Access to talent is high, and the cost of capital is low. For prospective franchise owners, crises provide the rare chance to see how a parent organization performs when the stakes are highest.

As a result of the pandemic, many Americans have found themselves separated from their employers. Although this an unfortunate consequence, the setback can be an opportunity for people who have dreamed of entrepreneurship but haven’t yet found the right time. If you are among these people, you may be in a great position to take advantage of a buyer’s market and fulfill your ambition.

Funding a New Business

One of the most appealing ways to fund a franchise in the current climate is by investing in yourself, debt-free, using qualified retirement funds that you’ve already earned. This is done with a strategy called Rollover for Business Startups, or ROBS. This method of funding is particularly smart with stocks trading near record highs, since your retirement funds are likely more valuable now than they have ever been.

For potential business owners with strong credit, the timing has never been better to obtain a small business loan at record-low interest rates. Many entrepreneurs take advantage of both ROBS and loans. Regardless of your funding strategy, it’s essential to have a realistic and well-thought-out plan.

Like many other companies, we have expanded our virtual outreach this year to connect with people in new ways. Our funding webinars allow current and potential entrepreneurs to discuss funding strategies with an expert, in a casual, no-pressure setting, emphasizing the unique circumstances of 2020 and the coronavirus pandemic.

To register for this complimentary webinar, sign up here. If you’re interested but unable to attend, feel free to register and we’ll send you the on-demand video afterward. We look forward to meeting you!