News

Franchisors on the sale hunt despite COVID-19 crisis

April 3, 2020

About two-thirds of franchisors are actively advancing franchise sales efforts despite the COVID-19 pandemic hitting across the globe.

That's a prime finding of a survey conducted by franchise management platform provider FranConnect conducted online in March.

The survey polled 233 franchise brand leaders regarding the impact of the coronavirus on the franchising industry, according to a press rlease.

Additional key findings include:
•    Nearly all brands surveyed in business services (86%) and commercial and residential services (89%) are continuing their sales efforts.
•    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.

"Based on our survey results, COVID-19 has had the most significant impact on the restaurant industry and personal services 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, said in the release. "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."

Franchisors remain optimistic for a quick recovery, reported the survey, with nearly half (48%) anticipating locations will reopen within two months and two-thirds (67%) expect system sales recovery within six months.