2021 Reflections, 2022 Predictions for Franchising
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2021 Reflections, 2022 Predictions for Franchising

2021 Reflections, 2022 Predictions for Franchising

Last year, we asked franchise thought leaders to share their predictions for 2021. The world was seemingly recovering from the upheaval of the pandemic and there was a sense of optimism. On the whole, the predictions came true.

Certainly, one of last year’s key themes was investing in employee engagement, with top talent becoming harder to find and retain. But perhaps no one could have foreseen The Great Resignation and the drastic effects the labor shortage would have on the economy.

Naturally, hiring and retention will be crucial in 2022, as will all relationship “soft skills,” from development teams nurturing candidates to FBCs supporting franchisees to being attuned to customer desires. So what else does the future hold for 2022? See what these franchising pros are predicting.

1. Candidates dropping out for a “dream job”

The 2022 franchise buyer will look different because of the world around us. What turned into a labor shortage in 2021 is now a full-blown economic shift moving toward the workers being in the driver’s seat. This is causing candidates to drop out of the process when they land their “dream” remote work job with a company that understands that talent is more important than requiring them to sit in a cubicle at the corporate office.

This will cause disruption for franchise development teams as they are left with a prime territory ready to sell to the next buyer. I am seeing this mentality daily so I am now preparing my future franchisee for this issue by creating a hard decision-making timeline, and making sure to address it with the franchisor when the introductions are made. Franchisors will have to be very transparent to incoming owners about the success they can have if working during the start-up process. If the model doesn’t work without an owner-operator, I most likely would not show it to begin with, and most importantly, they will have to meet owners who are successful doing both.

– Megan Allen, Market President and Franchise Owner, FranNet of Colorado

2. Private equity doubling down

My prediction from last year was clearly not brain surgery, yet true. The prediction that some turbulence would create life/career changes and encourage franchising was accurate. However, above that has been this Great Resignation – which is prompting more entry-level buyers into franchising. The biggest impact in franchising this year will be that properly capitalized equals big opportunity. Private equity buyers will continue to look at franchising as a viable addition to their portfolios. Thus, franchisors who accelerate growth may increase their valuation and find a viable exit in 2022. Thus, even though franchising will remain steady, I predict even more consolidation through family offices, PE, and, probably most impactful – groupings of brands that have tremendous data on a category (homeowners with home services; health and wellness with membership services; food brands with food chain management).

– Nick Powills, CEO, No Limit Agency

3. Growth despite manpower shortages

The changing landscape of labor continues to be one of the major challenges for any manpower-focused service business. Fortunately, franchising tends to bring the most cooperative and committed employees, which has been a positive outcome for Visiting Angels. There will always be a place for employees who seek a “passion’’ component, such as home care, where taking care of others is a life mission. The health risk component of the past 2 years certainly has caused many to sequester themselves and withdraw from the marketplace until financial requirements bring them back. Hopefully, this dynamic will change over time. However, we will continue to grow even with a more limited workforce.

– Dave Ritterling, Vice President, Visiting Angels

4. Franchisee focus on culture to combat labor issues

Franchisees’ top challenge will be people, and franchisors must be ready to help with those challenges – without crossing potential NLRB lines. Provide tools franchisees can (but aren’t mandated to) use to hire more quickly, and hire the right people. Franchisees will have to focus on their company culture: What makes people want to apply, say yes to working there, and stay? How can they use a stellar culture, including how they help their people grow, as a way to hire?

– Michelle Rowan, President & COO, Franchise Business Review

5. Innovation and change to reach customers

We saw throughout the pandemic that the companies that thrived were able to adapt and overcome change quickly. Franchising will continue to see new innovations and initiatives rolled out to better serve the needs of tomorrow. Brands have learned to “embrace the new normal” as pre-pandemic days are over. When pet ownership and adoption rates skyrocketed, we pivoted quickly to adapt to evolving consumer needs by offering omnichannel shopping options featuring 1-hour curbside delivery, delivery from store, prescription fulfillment, and auto-ship services. This proved to be a win for our neighbors (customers), as 40 percent of pet food purchases stem from same-day need, and next-day delivery just doesn’t cut it. While many of our neighbors have returned to in-store shopping because they missed the high-touch experience we provide, they are happy to know that they now have the option to shop with us however they want and whenever they want, either in-store or online. We’ll continue to see franchise companies add new services to meet and speak to their customers about how they want to be reached.

– Chris Rowland, CEO, Pet Supplies Plus

6. Nimble workforce = success

The Great Resignation, employees demanding work flexibility, the omicron variant, inflation, Zoom fatigue, and who knows what else the new year will throw at us? The pace of change in business, workforce, and financial markets is unprecedented. Everything is sped up (way up), which reminds me of an Andrew Carnegie quote: “Take away my people, but leave my factories and soon grass will grow on the factory floors. Take away my factories, but leave my people and soon we will have a new and better factory.”

The companies that thrive in 2022 will be the ones that think about, obsess over, and pay very close attention to their people – not just some slogan on a corporate wall, but the ones who care deeply in their bones about their people. This isn’t because of some soft science like “culture”; it has to do with ruthless business logic. The companies with the most engaged people will be able to be nimble regardless of size in 2022. That nimbleness is what it will take to succeed. The ability to adapt to unprecedented pace and the unforeseen will require a more engaged, more nurtured, and more motivated workforce than we’ve needed in a long time.

– Keith Robinson, Chief Strategy Officer, NextHome

7. Privacy changes and recruitment

One major challenge for brands in 2022 will be the changes in third-party data. There have been a lot of privacy changes that affect how you can advertise on Google, Facebook, and Instagram, and the restrictions will go even further in 2022. You will have to make sure you have implemented every platform’s best practices or followed their recommendations, being cautious with how you use first-party data, such as people’s email addresses or phone numbers.

These changes have many of our clients advertising more on LinkedIn, especially for franchise recruitment or business-to-business advertising. On LinkedIn, users update their own information on education, jobs, and even salaries, which makes it valuable first-party data.

– Lora Kellogg, CFE, President and CEO, Curious Jane

8. FBCs key to driving profitability

The role of the FBC (franchise business consultant) is one of, if not the most important role in a franchise organization, as this is the individual who really drives franchisee profitability. If a franchise company wants to grow, it must understand that the number-one driver of franchise company growth is profitable franchisees.

With the increase in companies using the franchise model for growth, there is increased competition for franchise candidates. While the economics of the business must be attractive, the franchise candidate is getting more sophisticated and is looking at the depth of support being offered.

With the ramped-up awareness about the importance of actively coaching franchisees to optimize profitability, the folks in the FBC role will need to have strong leadership skills. Some examples of the leadership skills that will result in more profitable franchisees include understanding how to create buy-in, how to hold franchisees accountable to their goals, how to manage conflict, and active listening skills. Gone are the days of simply being a messenger between the home office and the franchisees in the field.

– Angela Cote, CEO, AC Inc.

9. Changing workplace “norms”

As we look ahead to 2022, it becomes very clear that many of the changes made to survive the pandemic are here to stay. One example is virtual meetings. I can honestly say that before the pandemic I had participated in very few virtual calls or meetings. Today, it seems strange to schedule a regular phone call! I do not think we will put virtual calls and meetings back on the shelf. Another example is working from home. Our team has not returned full-time to the office, nor do we intend to. The pandemic taught us that we could work from home very efficiently and effectively. I am “old school,” and it took a while for me to get on board with the whole idea, but I must admit that I now enjoy the flexibility that working from home allows. The technology and tools we were all forced to adopt have now become a part of our lives. I am sure that every franchisor can point to some specific changes or modifications that they had to make during the pandemic that are now a regular part of doing business.

– Jania Bailey, CEO, FranNet

Next time: Poor employee recruiting practices exposed; leadership skills in hiring and retention; changing consumer demands; a focus on work-life balance; creativity and flexibility in attracting talent; continued candidate caution; go slow to go fast; and tech instead of people.

Published: January 12th, 2022

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