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It seems eons ago when we provided ideas of franchising industries that do well in a recession. I anticipated a recession in an election year, but could never have foreseen a novel virus. The disruptions to business and the economy are unprecedented and, yet, will provide opportunities in franchising.
The market for franchise purchases will be skewed in buyers’ favor. If capital is available or you are creative, you will find multiple opportunities. Some prospective deals will be from franchisors antsy to expand after an economic lull. And some will be from franchisees who are ready to hand over the reins to a new owner.
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As part of your due diligence and search for the perfect franchise match for you, carefully evaluate and kindly negotiate when buying a franchise in a post-pandemic world.
Look for resales. A ready-made operation will get you up and running very quickly. A motivated seller and a motivated franchisor will combine to provide an excellent option. However, there is a reason for its sale, so carefully check financial records from before the pandemic. A low price may be tempting, but profits and growth must still be on track. If things looked good until March, maybe.
Understand the franchisor. Franchise agreements may be significantly different in our new world. Understand every aspect of what is expected of you if you agree to work together. Examine the franchisor’s way of handling the pandemic. Are they still financially stable? Were they able to assist franchisees in a time of crisis?
Get creative on financing. Strong cash reserves always help, of course, but financing might make sense in order to keep everyone motivated to succeed. Seller-financed options might be wise to help ensure that the seller stays motivated to assist in the transition of ownership with continued success. Keep the previous owners on the payroll for a period of time to accelerate your learning and keep them motivated in the franchise’s continued success (and your continued payments to them).
Bring more to the business. If you buy a resale, plan now for ways to expand the business to increase sales. If there is a way to diversify products and services, it would be a good time to do so. And diversification will help protect you against future unforeseen market calamities.
Have a heart. Do well by being a good buyer. With so much economic fallout coming this year and into the next, negotiate with good intention and integrity. Market pricing will gift you with good deals, so there’s no need to be unkind to a troubled seller. The best deal is one that makes everyone a winner.
As we all look to survive and thrive in our business ventures, franchise opportunities are a good source of future investment. Dig for deals, and then move forward with the courage to create a bigger and better franchise for yourself.
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.