With the global economy reeling from the impacts of COVID-19, and independent businesses perhaps the most vulnerable of all, there are a few factors that have helped the performance of many franchise systems through the crisis and have them well placed to perform well in the recovery.

1. Industry dependent

There is no question that certain industries have been more resilient than others during the crisis. Contactless service providers such as home maintenance concepts and pet groomers have experienced little negative impact. 

Similarly, businesses like parcel and courier services have been kept busy with the spike of online activity that has occurred over recent months. In-home health service providers have also fared well as older citizens and their families look to reduce risk from excessive travel and human interactions. 

It is also noteworthy that parts of the broader food industry have offset their reduced foot traffic and dine in numbers, with the strong performance of their drive through and delivery channels. Similarly, many broader business service providers have had lower levels of disruption with their existing communication and service platforms standing up well.

2. Cost Structure

Industries that have a low fixed overhead structure, particularly in the key areas of rent and labour, have been able to preserve precious capital and cash flows as they adjust to reduced or uncertain trading environments.

3. Communication

The best franchises are normally very good communicators by nature. They listen to their customers, listen to their franchisees, and provide excellent coaching and mentoring to help their franchisees maximise their trading performance. 

In these times, good franchise systems have been screening the enormous amount of information being produced, and reproducing it to provide their franchisees with a concise version of what they need to know to protect themselves and their business.

4. Innovation and technology 

Most franchise systems operate in competitive markets and have a continual focus on innovation. New products and new channels are constantly being added to take advantage and survive in changing markets. 

For example, over the last ten years we have seen large investments in drive through, online ordering and other integrated technology platforms. For many, those investments have already started paying healthy dividends and these are set to continue in the recovery phase.

5. Agility

Another feature evidenced  by many franchise systems over recent weeks has been their agility. Franchisees have benefited from the system’s ability to source and distribute non-traditional products and services (e.g such as staple food items, even toilet paper, and COVID signage). New opportunities have also been created with the development and rollout of new services, such as installation of protective barriers and other personal protective equipment.

6. Support

Above all, the level of direct and meaningful support provided by franchise systems has enabled many of their franchised businesses to survive at a time when the future of other independent businesses appears less certain. 

We recently completed a survey of 55 franchise systems covering more than 11,000 businesses and found that 94% of franchise systems were providing ‘specific and multiple measures to support their franchises’. This support ranged from financial support, to assisting with landlord negotiations to navigating regulations and financial support packages.

In a time of great uncertainty and fear, it is apparent that many individual franchised businesses are performing soundly and deriving great benefit from the strength and proactive support being provided by their franchisor.

For those considering a small business, the franchise model is receiving attention again, and this time for all the right reasons. Opportunities seem to be apparent again for those able to effectively identify the better performing brands.