Picking the right time to get into a franchise or any business, has always been vexed. But, the appetite is strong for many, so how does 2023 look?

Well, this is an interesting question!

It goes without saying that none of the below acts as financial advice, and is general commentary in nature - so let’s get stuck into the question.

The desire to ‘be your own boss’

Yes, I cringe a little at times when this cliche is peddled out by all and sundry involved in franchising, including me, even though I try to avoid using that saying!

It is often used as an emotional catch-cry or call to action for anything around selling franchises. However, in essence, the message is pretty deep and on the mark.

41% of people would 'love' to own a business

In fact, an NAB Insights Report dated Feb 2022 found that a huge number of Australians want to own their own business, stating that “If Australians had a choice, over 4 in 10 people indicated they would love to own their own business (41%), while nearly 1 in 10 have already started their own business (9%).”

That 41% of people who ‘if they had a choice’ would love to own their own business is what excites and entices many franchise system operators into franchising their concepts.

So, with that in mind, you could reasonably argue that anyone who has anything to do with franchising, which for the most part lives and breathes on franchise network growth, they probably would say that the timing is right to invest - at any time:-). 

What I’m interested in for you, is specific thoughts around the context of getting into a franchise business of your own at this point in 2023 given high inflation, staff shortages, rising interest rates, war in Ukraine, a continuing pandemic recovery…yikes.

Interest in franchising an idea is up (sort of)

According to Brian Keen, founder of Franchise Simply, a consultancy that specialises in helping entrepreneurs to franchise their idea, raw enquiry numbers are lower, BUT the number of what he considers ‘serious’ enquiries that progress well beyond an initial consult are certainly up.

“On that measure of what we consider ‘serious prospects’ to franchise their concept, we’ve had our biggest December (in 2022) enquiry number on record.” 

Brian puts this down to “...people recognising the market potential as we come out of a downturn environment of the recent volatile year.”

“I have witnessed this following downturns of 1982, 1992, and 2008. It's a recurring pattern where we have a downturn in confidence, followed by a swift upturn. Where a lot of people are looking to change their whole approach to life and franchising offers safeguards like standing on someone else's shoulders, reducing their risk.”

Brian also adds on a sharp warning for would-be and even existing franchisors.

“I think business has become a bit scarier for many. It has become so ‘techie’ and a lot of franchisors have not got their head around this and can't see the writing on the wall (adopting technology). 

If you don’t get on top of new apps and the like, then you are going to be sliding down the pathway of losing communication with your market.”

Micro-conditions may make it the right time

Warren Ballantyne, the founder of Gutter-Vac, a home services based franchise with 80+ locations nationally, has a practical view of the timing and conditions.

“From our point of view, the best time to invest in 2023 is from now till June 30. This is because of record low interest rates for business finance at something around 6.5% currently, and the instant asset write-off offered by the ATO for basically anything you buy for the business. 

Really, the instant asset write-off is a win for anyone going into any type of business, not just a franchise.”

Warren also hints toward flexibility being more common in the market for people wanting to get into a franchise.

“In our case, we put out a rent to own offering as opposed to the traditional full capital purchase upfront offer for our franchises. That has been a win all-round. As a franchisor when renting the assets out, we also get the depreciation, so it’s truly a win-win.”

Previous 3 years have provided the ultimate franchise brand stress-test

According to Darryn McAuliffe, CEO Frandata Australia, he sees the importance and opportunity of being able to use the previous 2-3 years as the ultimate stress-test in measuring and researching franchise brands right now.

“The reality is that the last 2 or 3 years has provided multiple proof points for quality franchise systems for what they have done to protect and grow the businesses of their franchisees.”

Understanding what a franchise system did to support their franchise owners during the toughest of times is arguably a good measure for the future.

“And importantly because of this, we have active franchise lenders recognising the quality of many franchise systems, and are generally open for business (lending).”

However with the volatility and uncertainty of the broad trading conditions of previous years, and their impact on today's market, Darryn notes. 

“But a word of caution, as it is important to do your research on not just the brand you are attracted to, but the industry they operate in and whether that has emerged stronger or weaker after events of recent years.”

The ‘right’ timing is a personal thing

Of course there are so many factors that go into every person's circumstance of the ‘right timing’.

These need to be weighed in your situation and blended with expert input from experienced franchise and professional advisors.

Note that consumer habits have also changed rapidly over the previous couple of years, and as such, an almost changing of the guard seems apparent in a number of sectors where once strong brands have had competitive advantages eroded.

With such a fast-changing marketplace, entering any business needs to be coupled with clarity of what the ‘real’ performance is outside of any altered trading conditions brought about by the pandemic disrupted trading patterns, be they positive or negative for a time.

However, what is also clear is that many franchise brands have come off a number of soft years of franchise expansion, so motivation to grow by adding on new franchise locations is high in this post-covid economy.