The Growth of Franchising in 2021 and Beyond

Starting a business is a challenge for many new entrepreneurs. They struggle with building awareness, attracting customers, and maintaining growth. Often, business owners eventually give up due to stress and failure to gain profits from their initial investment. This often happens under normal circumstances. Enter COVID-19. The dreadful virus made entrepreneurship even more stressful than it already was. But how did this affect entrepreneurs considering the world of franchising? Read on!

Many companies had to cease operations for fear of spreading the virus. Also, for a while, people stopped spending as much as they did before due to layoffs. This was especially true for what some consider non-essential businesses like barbershops, nail salons, and gyms.

But this was less true for franchisees. Franchisees had something that many mom-and-pop businesses didn’t have: support and brand name recognition. These factors have helped many franchises stay afloat during the pandemic.

However, there’s also another trend to watch out for since the start of the pandemic: the growth of franchising.

Economic Pressures Lead to Self-Investment

Layoffs occurred within a wide range of industries due to the pandemic. People began to experience economic pressures from lack of employment, which forced them to re-evaluate their lives. While COVID caused bankruptcy for many, others took it as an opportunity to reinvent themselves, which often entails entrepreneurship. They couldn’t count on a job, so they thought, “Why not create my own business where I have more control of my future?”

Franchise sales tend to increase during times of high unemployment. Post-COVID franchise sales are no different. People have begun to invest in themselves rather than invest their time in the job market.

Aspiring Entrepreneurs Want a More Stable Business Model

Buying a franchise offers a sense of security. At this age, feeling secure is paramount. The uncertainties of COVID and whether it will ever go away has people experiencing so many emotions all at once. They’re scared, frustrated, angry, and helpless. Investing in a business that they’re not sure will be successful is downright scary. Many people are realizing that franchises can help ease that fear.

92% of franchises are still going strong after five years in the U.S. In general, a huge percentage of businesses fail. A lot of this is due to lack of capital, not investigating the market, poor marketing, unprofitable business model, and other reasons. Franchising eliminates a lot of those problems, which leads us to our next point.

Strong Brand Awareness is an Attractive Benefit of Franchising

When you buy a franchise, you’re not just buying a proven business model. You’re also working with an established brand, with an established customer base. COVID has driven more and more people to go the safer route when it comes to purchasing from brands. They gravitate towards familiar businesses, perhaps because it makes them feel more “safe” and in control during such chaotic times.

As a result, aspiring entrepreneurs don’t want to take huge risks by investing in a new brand. Franchising creates a business model that means a minimal risk for a business owner starting the company and minimal risk for a consumer using the business.

Strong brand awareness helps franchise owners avoid common problems other businesses face. Having a recognizable name makes it easier for franchisees to market their business and appeal to customers who have likely already used the brand.

Starting a franchise may benefit you whether you are first-generation rich or have second-generation wealth. Purchasing a franchise is a great option for first-timers because they’re joining a brand with a proven track record.

So whether it’s your first time starting a business or you want to be absent from the everyday part of operations, CreditHub can help secure capital using SBA programs and other financing options. Contact us today and find out how we can help you.