In a March 2020 online survey, FranConnect, the leading provider of franchise management platform solutions, found approximately two-thirds of franchisors are actively moving forward with franchise sales efforts despite the paralyzing impact of the COVID-19 crisis in anticipation of an influx of Americans looking for business opportunities as unemployment soars.
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FranConnect surveyed 233 executives of franchise brands to quantify the impact of the COVID-19 pandemic on the franchising industry. The survey shows how franchise businesses of different sizes and in different sectors are reacting through changes to their strategy and operations. Among the key findings:
- FranConnect found nearly all brands surveyed in business services (86%) and commercial and residential services (89%) are continuing their sales efforts;
- However, 75% of full-service restaurants — one of the hardest-hit segments over the last month — reported halting franchise sales.
- Over half of micro-emerging brands (under 25 locations) surveyed stated they’ve stopped their franchise sales efforts, compared to only 16% of those with between 100 and 500 units.
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“Based on our survey results, COVID-19 has had the most significant impact on the restaurant industry and personal services1 segment, so it’s not surprising to see franchisors scaling back or temporarily ceasing their franchise sales programs. As 67% of franchisors in our survey expect system sales to return to pre-pandemic levels in about six months, a conservative approach to new growth makes sense,” said Keith Gerson, President of Franchise Operations, FranConnect. “However, other segments that haven’t seen nearly the same degree of revenue decline are continuing their recruitment efforts. Historically, when unemployment begins to grow, many franchisors see increased interest in their franchise opportunity. There’s a historic perspective that as the job market softens and Americans no longer have confidence in their current employment situation, many may want the security of being their own bosses.”
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