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Franchise Sectors Primed for Post-Lockdown Growth

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Much attention has been paid to large companies that have thrived throughout the COVID-19 pandemic and the Great Lockdown. A few tech and eCommerce giants may come to mind. There has also been considerable focus on the retail sectors that have been upended, and the thousands of small businesses forced to shut their doors.

COVID-19 isn’t going away anytime soon, but localized reopenings have been underway for almost two months. Several recession-resistant sectors are showing signs of life and are poised to grow post-lockdown. This is an ideal time to consider ways to capitalize as a potential small business owner, or as a current small business owner considering a pivot. All crises end, and new leaders always emerge.

The franchising business model has unique advantages during recessions and in their aftermaths. Unlike starting from square one, you’re investing in a proven system, which lowers risk. The parent organization’s resources provide unmatched support and stability that is often essential in times of uncertainty. And crises provide rare opportunities to see how franchisors perform when the stakes are highest.

Food Services

Although coronavirus and subsequent social distancing measures have forced restaurants to change how they do business, there will always be a need for prepared food. There will also always be a social need for the platform that restaurants provide.

The short-term future of restaurants is convoluted and unclear. However, despite a majority of American restaurants still operating at limited capacity, the industry is already seeing signs of recovery and increased foot traffic. And by July, 85% of US restaurants will be located in markets with some degree of on-premise dining allowed.

Brands with takeaway options are poised to do particularly well as recovery unfolds. The restaurant industry is still in a volatile place, but by some metrics, it already appears to have begun its rebound. Fast food franchises plan on hiring tens of thousands of new employees this summer. Reservations on platforms like open table have begun to recover (see figure below). Restaurants will be back, even if the way they do business is permanently altered.


OpenTable seated reservation diners, % YoY


Cleaning and Restoration Services

Sanitation might be more of a concern now than in any other time in modern history. A vast majority of Americans are beefing up their hygiene habits. Sanitation is ultimately a matter of public safety, which is more important now than ever.

Many industry experts forecast a major surge in spending on cleaning services, which will fundamentally change the industry. Commercial janitorial services are predicted to be a $50B industry by 2023.

Most business leaders plan on increasing cleaning of their facilities once reopened, and a majority of consumers want workspaces cleaned daily. The nature of cleaning itself is expected to shift as well; there has been a considerable push for new and more thorough disinfecting methods, as employees and customers demand safer spaces.

 Established market leaders like PuroClean – who specialize in restoration services, including biohazard cleanup – have been at the forefront of frontline coronavirus responses. PuroClean has experienced 82% revenue growth and 33% unit growth since 2015. Cleaning and sanitation services are booming, and growth in demand isn’t expected to slow anytime soon.

Custiodian cleaning linoleum floor

 

Household Services

Millions of Americans have spent much of the past four months at home, whether due to layoffs, furloughs, or working remotely. Our homes are usually our most important spaces, and no downturn will change that. Demand for household services will always exist. Many of these services are primed to grow through 2020 and beyond.

With disease on everyone’s minds, it’s important to note that mosquitoes are the deadliest animal in the world and have become increasingly problematic in the US. No economic downturn is going to change this; people will always have a need to exterminate mosquitoes and other pests from their homes and businesses. Pest control franchises can be great investments. For example, Mosquito Authority franchise owners average $380k yearly revenue, with 10% average growth.

Home improvements have been on the minds of many Americans; per a recent Bank of America survey, more than 70% of polled homeowners have decided to take on home improvement projects during quarantine and its aftermath, with more repairs planned for 2021. Although big-box hardware stores are the most visible beneficiaries of this trend, not everyone performs every repair or improvement themselves.

There are many businesses whose specialized services add value that homeowners would be unable to replicate on their own. For example, RoofMaxx’s proprietary technology can extend the life of a home’s roof up to five years per application. There will always be demand for home improvement services like this, regardless of economic conditions.

Man sprays kitchen for pests

 

In-Home Care Services

People are never going to stop aging, even when it feels as if the world has stopped. All Baby Boomers will be 65 or older by 2030. That’s estimated to be more than 70 million people. The US Census Bureau is already referring to this demographic shift as the “Grey Tsunami.”

An estimated 40% of US coronavirus cases can be traced to nursing homes, which has already made many Americans wary of them. Industry leaders such as Right at Home have been providing at-home alternatives for years. A three-year study measured their package of services to have reduced preventable hospital readmissions by 65%; in-home care services are more than a great business opportunity. They’re also a great way to make a difference in people’s lives.

Home care professional reads with elderly woman



Here at FranFund, we know how to help you obtain funding for franchise businesses. It’s what we do. We’re committed to helping you navigate this unique downturn and come out on top, whether you’re a new business owner, or a seasoned entrepreneur considering expansion. If you’d like to explore financing options, we welcome you to schedule a complimentary educational consultation with one of our funding experts.

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