As we approach a new year, HIRE YOURSELF is learning from 2020. This year was certainly a turbulent year. If you have heard an episode of the HYS Podcast, you know that we love to call this year a Black Swan event. But, even though this year was irregular, it does not mean there is nothing to learn. Franchising trends in 2021 will be profoundly affected by 2020.
The COVID-19 pandemic and the ensuing economic downturn forced franchises to adapt. Anyone investigating a franchise had the unique opportunity to see how a potential franchisor assisted their franchisees to maintain a successful business. We have witnessed franchisors grow during this time due to forward-thinking, while others maintained a baseline through turmoil—a few faltered.
There were many market forces the were unforeseen, as with any industry. With the number of people staying home, their spending habits shifted, and franchises captured those shifts. The HYS consultants think these trends will continue through 2021 since the pandemic will not come to an immediate end, and 2020 has likely changed Americans' purchasing behavior for years to come.
The following are a few trends we predict will continue to grow in 2021 as investments. They are certainly candidates for investigation by any potential franchisee.
2021 Franchising Trend #1: Home Renovation and Improvement Services
Most people were stuck at home this year for extended amounts of time. Maybe there was a short, local vacation, but generally, Americans worked, played, and lived in their homes. This led to a considerable increase in spending on improving that space. Discretionary spending was put toward home improvement.
Deliveries of furniture, new flooring, and updating the paint colors on walls have focused on sprucing up a space to enjoy each day. Lowe's and Home Depot have seen sales rise, as have franchises dealing in this part of the industry.
Even the HYS consultants have taken part in this trend. They can't seem to get rid of all the cardboard at their houses!
2021 Franchising Trend #2:
Health and Wellness Services
From gyms to spas, everyone wants to feel good right now. When there are a few things that you can control, you invest in what you can–how you feel!
MediSpas, exercise classes, and salons have had to deal with coronavirus measures to maintain business. Franchisees have had a vast advantage over mom-and-pop stores in this area. A franchisee doesn't have to navigate this process alone! The franchisor will send all pertinent information to the franchisee, provide additional training, and grant access to supplies (like PPE). Where some independent stores struggled, franchises blossomed.
There has been a significant movement towards bio-hacking and new therapeutic franchises in recent months, like cryotherapy. It is easy to see these concepts gain steam as professional athletes begin to use these types of services more and more.
2021 Franchising Trend #3:
Food Franchises
Pete doesn't enjoy food franchises as an option for his candidates. They are expensive to start up, have a long build time, and can be a difficult segment of the market to succeed quickly. That being said, during the past few months, they have done remarkably well.
Food businesses with drive-thru operations found an expanding market as indoor dining shuttered.
People still want to eat out, but as options dwindle, fast food and fast-casual operations are gaining business. The future may see this trend continue, and instead of large dining rooms, more restaurants may build two drive-thru lanes instead. This will lower the capital requirements and make many food franchises more accessible to franchisee candidates.
2021 Franchising Trend #4:
Learning and Activity Services for Kids
No matter what the state of the economy, parents will strive to provide for their children. When the economy turns, parents often try to offer more than before.
With most schoolchildren experiencing online learning or disruptions in learning, they may experience a learning slide. This is where tutoring services can step in and help. Parents who value their children's education will move towards acquiring these services. There are many franchises out there that provide tutoring or advanced learning.
Kids being cooped up inside all day with little interaction or activity will yield growth for franchises that can offer safe interactions, like martial arts, coding, and other sports. Schools sports and activities have been forced into limbo in many areas, and franchises can step in and capture that market availability.
2021 Franchising Trend #5: Technology
2020 forced franchises to increase their development of a technology stack. Many gyms started offering at-home classes online, painting services built systems to Zoom quotes, and junk removal services made apps to provide continuation of services. Anyone who didn't embrace and expand technology found themselves left behind.
Technology has been increasing in importance for franchises for years and was another separator from the mom-and-pop shops, but 2020 accelerated adoption. No matter what age a customer is, they likely encountered a new technology this year. Now they have become used to using it.
Make sure to see where the franchisor is adapting technology for the future when investigating a concept. If they seem complacent after this year, you need to decide if that business can continue functioning without a reliable technology platform.
There are no absolutes when investing in a franchise. Like any investment, there are risks, but taking into account the past can provide a look at what will be important in the future. 2021 will be another exciting year for franchising. We aren't out of the woods yet, but we see the light at the end of the tunnel with the coronavirus pandemic. We are excited to see the continued growth of franchising this year.
We invite you to schedule a free consultation with a HIRE YOURSELF consultant if you think franchising may be right for you. Our service is free to the franchisee, and we can help you on your way to income security and financial freedom.
