Amongst other things, what an odd time we’re living in.

We’ve always been a platform where people can browse and understand more about potentially investing in a franchise or other business. And the pandemic period has seen interest and motivation in this ebb and flow - at times on a daily basis.

For instance, our web traffic here at franchise buyer, comparing this July (21) to July (20), we have five (5) times the site visitors than a year ago.

People are looking for options in solutions.

“I just want something more secure”

When we were able to attend the Sydney Franchising Expo in March this year, it was the norm for people in attendance looking at investing in a business, to tell me that;

1. My current job hours have been sporadic,
2. I got made redundant,
3. I just want something more secure, something of my own after the uncertainty of 2020.

Broadly, the gist of it was that we are all looking for some form of control on our lives and income. This has always been the case really for people looking at a franchise however, it seems more acute in the throes of the pandemic.

Will a business make it even worse?

That’s a good question, as we’re seeing businesses of all types go through enormous pain through lockdown uncertainty. Yet, we’re also seeing a lot of businesses reporting their best years on record in 2020!

We’ve had PACK & SEND report a 32% sales growth record year, Domino’s share price in Australia went from around $47 in early 2020, and now sits at $123 on the ASX, Bedshed, Baskin-Robbins, and many more have anecdotally been reporting significant sales growth.

So, you can argue that the ‘security’ we’re all seeking is attainable, but how do you identify it for your particular circumstance? 

What the market says

“Buyers are not in the frame of mind to take any risks at the moment.” according to Len Ferguson, co-founder of Finn Franchise Brokers. 

And hesitancy of entering into a lease on a commercial premises is driving a lot of behaviour in Len’s thinking. 

“From what I’m seeing, buyers are not at all interested in long-term leases on premises, or spending hundreds of thousands of $ on a business that COVID has shown to be risky.”    

Len is also seeing a trend toward more flexible, less risky options to start a business.  

 “Of course, there will always be people that will buy retail premises-type franchises, but in general, we're seeing a trend towards low risk, less commitment with much lower entry costs. People are also looking for more flexibility, meaning businesses that offer the opportunity to start on a part-time basis and develop into a full-time business are also proving to be attractive.”

Good businesses (of any type) are still attractive

According to Mark Crapper, an experienced franchise executive, and business broker with Benchmark Business, “I am finding enquiries (on businesses for sale), are now back to where they were before COVID. We had a dip in enquiries in the first part of July 21 with the varying lockdowns.”

Further, in some ways Mark is seeing no change, as “Good, well-priced businesses are as always, still very attractive…over-priced, or poor businesses, as always, sit around for a long time.”

Shopping centre businesses and turning poor performing businesses around

Mark has also seen trends within shopping centres, and in savvy buyers snapping up opportunities.

“The food franchises in the lower price point move reasonably quickly in the shopping centres if the location and the rent is reasonable, but the higher price brackets are slower to move, unless they are one of the hot brands in the market at the moment. 

The brands that are not shopping centre focused seem to be doing as well or better than the shopping centre focused brands for profit rather than turnover. 

Buyers that are already in these brands, or new buyers that are focused on being great managers and great retailers, see opportunities in the big brands to buy the underperforming outlets and turn them around, getting a quick return on investment over 18-24 months and selling again.”