Franchises touted as a post-pandemic small-business opportunity
Like most sectors, franchising took a hit last year because of the pandemic, losing close to 20,000 establishments and over 900,000 jobs nationwide, according to a report from the International Franchise Association.
But recovery is expected this year, with research and advisory firm FRANdata projecting more than 26,000 new franchised businesses opening in 2021, adding nearly 800,000 new jobs and recouping most of the losses felt in 2020, according to IFA.
Locally, experts are already seeing amped-up interest in franchising.
"I think 2021 is going to be better than pre-pandemic levels," says Tom Scarda, a Wantagh-based franchise consultant and president of The Franchise Academy, who matches individuals with franchising businesses and receives commissions from the franchisers when deals are sealed.
He said people interested in franchises have told him they have money to buy in after putting off trips and discretionary spending due to shutdowns. Plus, others got a taste of freedom working from home and "never want to go back to the cubicle and the commute," asserts Scarda.
Off the road
Paul Chirichella, 45, of Bayville, who’s working with Scarda to find a franchise, likes the flexibility that comes with being his own boss.
He was given a severance package on Dec. 31 after working almost 16 years in corporate financing for a Manhattan-based entertainment company that took a hit from the pandemic.
The father of three says, "I want a lifestyle change and I want to be at my kids' hockey games and not be commuting to Manhattan."
Chirichella hasn’t decided upon a franchise concept yet, but is working with Scarda now to find the right fit.
For 2021, IFA expects the most growth in the commercial and residential services industry (such as cleaning, construction and remodeling), as well as continued strength with quick-service restaurants (QSR).
"Home renovation is huge," says Matt Haller, IFA’s senior vice president of government relations and public affairs.
Provided that the industry sees continued government support as it did with the extension of the Paycheck Protection Program, pent-up demand and people having more personal savings will help fuel franchising growth, he says.
Franchising is a good alternative because "you’re in business for yourself but not by yourself," says Haller.
You’re buying into an established concept with the franchiser’s support structure that usually includes training and marketing support to franchisees, he says.
It’s a good time to buy, considering interest rates are low, and with the pandemic, there’s government funding opportunities including through the Small Business Administration, contends Harold Kestenbaum, a franchise attorney and partner in the Melville office of Spadea Lignana.
"I think it’s going to be an unbelievable 2021 with the vaccines and restrictions being lifted," he says.
Businesses with new ambitions
Kestenbaum represents franchisers, not franchisees. On that end, he says he is seeing more interest in existing businesses wanting to expand by franchising their concepts.
QSR eateries have been a popular concept for franchising, as well as anything in the home services industry and senior care services.
A QSR franchise could run anywhere from $100,000 to $200,000, while a home-based service business that doesn’t need brick-and-mortar space could be an under-$100,000 investment, says Kestenbaum.
To be sure, there are lots of opportunities.
Nancy Williams, owner of Oakland, Calif.-based NValuable Franchise Consulting Inc., which specializes in consulting to women and minorities, agrees, noting, "we are expecting the overall industry to recover."
She said FranServe, the franchise consulting firm with which her firm is affiliated, set a new company record for placements [of new franchisees] in Q1 2021.
Don't want to go back
Like Scarda, she’s found many people were working from home. They like the flexibility and work/life balance that comes with that and aren’t excited to go back working for someone else.
In addition, many women didn’t have day care options during shutdowns and had to devote time to schooling at home and subsequently quit their jobs or sought work-from-home options.
During the pandemic such franchise concepts as commercial cleaning services and senior home care did very well, as did pet care services, says Williams.
Dog days are here
"The pet population grew dramatically through COVID," says Chris Kempner, a partner in Bridgeport, Conn.-based Red Barn Dog Holdings, which owns and operates 16 Dogtopias, including a new location in Bethpage.
According to the American Pet Products Association, 11.38-million U.S. households got a new pet during the pandemic.
Red Barn originally had planned opening the Bethpage location in 2020 but given the lockdowns, decided to wait until this past March, says Kempner.
While Bethpage is the first Long Island location for Dogtopia, which offers dog day care, boarding and spa services, it hopes to open eight more locations across Long Island over the next three years, Kempner says.
For 2021, New York is projected to have a total of 30,087 franchise establishments employing 318,722 workers, according to FRANdata. 2020 data for NY and Long Island data was unavailable.