This “Outside Consultant” column by Mike Porter, EdD, a faculty member in the Marketing Department at Opus College of Business, ran in the Star Tribune on March 1, 2021.
Many things certainly will have changed as we begin to move past the pandemic. Any entrepreneur wants to minimize risk and make good decisions on new ventures, and especially when considering the commitment of purchasing a franchise.
According to John Francis, often known as “Johnny Franchise,” regardless of the franchise category that interests you, begin with homework on how the franchisor handles things for the business and franchisees during the pandemic.
For instance, many franchisors worked to help franchisees during COVID-19 Paycheck Protection Program (PPP) relief. Francis saw that the parent companies helping individual business owners manage paperwork “saved many of franchisees. Look at what these firms did, and take it as support element – positive for franchisee.”
Seriously consider how the firm: managed communication with customers and owners; made changes to the business that impacted operations and customer/owner experience; and showed results from those changes. Of course, also consider the projected future of the franchise category and market.
Francis also encourages potential franchisees to talk to the franchisor directly, and to owners of the existing franchise if looking to buy a “used” operation. Look for frank and transparent answers to questions regarding the last year and prospects and initiatives for success going forward.
Another aspect to consider going forward – the size of the franchising company. Francis notes that while “small franchise companies may offer ability to be nimble, look at what bigger firms have done to change the entire landscape.”
Few aspects of business remain absolutely certain, even in the most stable of market conditions. One reason individuals look to franchising stems from the “proven” nature of the business model and/or existing structure that minimizes the necessity of the new entrepreneur to excel in business roles outside their expertise. As we move into the post-pandemic “normal,” things will certainly not be more certain than in the past, but the advantages for some businesspeople of partnering with a larger firm as a franchisee likely offers opportunities to mitigate the risks.
Mike Porter, EdD, is a faculty member in the Marketing Department at the University of St. Thomas Opus College of Business.