A new economic outlook report from the International Franchise Association (IFA) indicates that franchising is leading economic recovery in the U.S., with 2021 job and business growth flourishing across franchising sectors, from personal services to lodging.
Franchise growth is projected to expand by 2.2% in 2022, with an additional 17,000 establishments opening throughout the year, reaching a total of 792,014 nationally. In the Southeast region alone – where the largest concentration of franchisees cluster – approximately 2.6 million workers are projected to be employed by the year’s end, contributing $235.9 billion in output to the U.S. economy.
The franchise boom comes during what economists are calling the Great Resignation – the recent workforce departure phenomena estimated by the New York Times to be more than 40 million employees.
Periods of change like we’re seeing in our labor markets can often provide the ideal moment for new opportunity. If you have an innovative idea, the desire to pursue a new business experience or simply have an itch to shake things up, now might be the time to do so. One way to hop outside your comfort zone without assuming significant financial risk: Buy a franchise business.
Owning a franchise can be a great opportunity. It provides the flexibility of running your own business while also providing the support of a larger company.
We touched base with a franchise banking expert at Bremer Bank, who shared their five key factors to pay special attention to for those ready to take the leap.
Work with your franchisor
One of the top benefits of owning a franchise is the support you get from your franchisor. Take advantage of this by seeking their advice and feedback on things like marketing support, system recommendations, inventory guidelines and any other contractual obligations. Doing so also helps to clarify expectations for how you run your business, which you can use to your advantage for growth planning.
Support the success of your employees
Happy employees provide quality service – and as explored above, people have a lot of career choices these days. To ensure your employees are engaged and satisfied, you should check in with them regularly and take their feedback into consideration. At a minimum, send out an annual employee satisfaction survey to gauge team thoughts and needs. This can provide a useful benchmark to compare employee satisfaction over a set amount of time.
As your business grows, continue to foster your employee relationships and invest in training and career opportunities for team members.
Let your data inform your decisions
As a business owner, it’s important to do a pulse check on your business. You likely have a lot of data from your website, point of sale, ordering system and employees. But what do you do with all of it – and how do you interpret it? Paying attention to four core metrics – sales, growth rate, profit and customer satisfaction – can help inform decision-making and provide valuable business insight.
Set goals to grow
If you’re enjoying running a single successful franchise, consider opening another. Owning multiple franchise locations can be financially lucrative and makes efficient sense as you scale your business.
A few key considerations: Hire talent you can trust and learn how to delegate lower-level tasks so you can focus on general management. Don’t forget to check your existing contract to ensure you aren’t breaching any agreements by opening another – many franchisors have rules about their franchisees opening competing concepts.
Your banker can be your biggest partner
Like any business owner, a franchise owner should have a great relationship with their bank. Your banker can ensure big decisions are financially sound.
Franchises operate differently than other small businesses. Find a bank that understands franchises and their specific financial needs, one that can provide hands-on service and products. Banks that offer access to capital like development lines of credits, acquisition lines of credit, Small Business Administration (SBA) loans or treasury management services are often a great place to start.
Bremer Financial Corporation is a privately held, regional financial services company with $16 billion in assets. Founded in 1943 by Otto Bremer, the company is headquartered in St. Paul, Minnesota, and provides a comprehensive range of banking, mortgage, investment, wealth management, and insurance products and services.