Why Franchising Will Thrive in 2021

Anuj Srivastava
Author : Anuj Srivastava
June 16, 2021
4 Minutes Read
  
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    The year 2020 was challenging for business in general, and many companies were forced to reduce their operations and close locations. However, franchising is a promising opportunity in 2021, since you can replicate a successful business model. Also, the high vacancy rate of commercial spaces gives you plenty of options to choose from.


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    There are several promising franchise sectors for 2021, which include package delivery and home supply. Many franchises are already decades old, and they have experience dealing with recessions and economic hardships. Offering their products or services can be a lucrative business opportunity, especially if you find a suitable location.

    Franchising Reduces Risk When Opening a Business 

    Risks

    When you open a franchise, you avoid the trial-and-error process of starting a company from zero. Franchises have already improved their business model over time, and they provide operation manuals for their partners. The year 2020 has left a challenging environment for businesses, and franchising is an effective strategy to reduce risk.

    A franchise gives you an advantage in terms of marketing and positioning, especially if the brand is already a household name. Even if you can develop a successful business model on your own, franchising gives you immediate access to a large customer base. You also gain access to their e-commerce platforms and mobile apps, which are expensive to develop on your own.

    Opening a franchise means you must share profits, but you can skip many risks that  come with starting a business. Franchising also gives you the support of a large corporation, which gives you more negotiation power when working with banks or external providers.

    There Are Plenty of Commercial Spaces Available for Franchises

    commercial space for franchise

    Shopping malls and other commercial spaces are currently struggling with low occupancy. The COVID-19 lockdowns forced many businesses to stay closed, and in many cases they decided to close permanently. Some retailers have expanded their online presence with e-commerce, while reducing their number of physical stores.

    According to a survey by Deloitte, 59% of commercial real estate companies expect an increase in vacancy for 2021. However, this also means you have more options to choose from when starting a franchise. For example, if you offer a product or service for apartment owners, you can look for a vacant commercial space in a mixed-use building. This way, your customers can simply walk from the elevator to your store.

    Franchise operation manuals cover the technical requirements for new locations, and they may even provide samples of construction drawings. You must also meet building codes, and there may be landlord requirements as well. However, a qualified MEP engineering firm can help you design a commercial space that meets all the applicable requirements.

    You Can Take Advantage of Low Interest Rates When Franchising

    Interest rate in franchise

    Franchising requires an initial investment, which includes an initial franchise fee and the commercial space fitout. However, the federal funds rate has been set as 0%-0.25% as an economic stimulus, and this leads to low interest rates throughout the financial sector. Having access to favorable loan conditions is among the advantages of starting a franchise in 2021.

    Even if you have the capital available to start a franchise, a loan gives you the opportunity to start operating at zero upfront cost. Also, the capital that would have been spent upfront remains available for other investments. MEP engineers help you identify the best energy efficiency measures for the commercial space where you will open the franchise. In this case, reduced operating costs are combined with lower interest rates, improving your profit margins.

    Franchising Gives You a Technological Advantage

    technology advantage

    Technology has become necessary to stay competitive in the modern business world, and this also applies for franchises. COVID-19 accelerated the adoption of technology, especially e-commerce platforms and remote collaboration tools. Franchises improved their mobile apps and platforms in 2020, and these tools give a competitive edge for their franchisees.

    Franchising gives you access to all the technology that has already been developed by the brand. On the other hand, business owners who start from zero must create their own platforms, and there is a learning curve even when these services are outsourced. A franchise can help you skip these steps, giving you an established digital presence.

    Conclusion

    Franchising offers many advantages, especially when you consider the business environment at the start of 2021. First of all, you reduce risk by using a proven business model, and you benefit from their marketing and technology investments. Also, vacancy rates are high in the commercial real estate sector - you can find good locations and favorable lease conditions. Finally, the low interest rates currently available can help you cover upfront costs.

    Regardless of your franchise and chosen location, you will need to redesign and fit out a space according to their specifications. An experienced MEP engineering firm can help you meet any requirements from the franchise and landlord, while following local building codes.

    Tags franchise rollout | franchise fitout | franchise building design | franchising | Franchise

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