As we approach the end of 2022 it’s a time to not only reflect on the year but also what’s ahead of us in 2023 and the outlook for those who are looking at becoming their own boss. Will 2023 really be all doom and gloom?
It is fair to say that overall, 2022 has been a strong year. There has been a lot of continued interest from both franchisors and franchisees alike and the general market appears fairly buoyant. This was borne out by the recent National Franchise Exhibition at the NEC that had a strong attendance level and great engagement at the various presentations from industry experts.
It felt like there was a real willingness and desire amongst the delegates to get under the skin of franchising, understand how it could work for them individually but also how they can use franchising to make a difference, whether that be environmentally, in social responsibility or really caring about how the business impacted on their community.
But what about the outlook for next year? Will that momentum be carried forward?
At time of writing, interest rates have just been increased by the Bank of England, the highest level in over a decade with economic commentators predicting further rises into early 2023. The Bank of England are also predicting a UK recession and an upward trend in unemployment, plus with rising pressure on household budgets, and the UN COP27 Summit talking of ‘climate chaos’ it feels like doom and gloom all round!
So what does that all mean for the franchise market in 2023?
The reality is, whether you are a potential franchisee or franchisor, the rationale for franchising remains sound and there are opportunities out there. That’s not to ignore the current economic uncertainty and understandably many of us are hesitant about committing to change at the moment, waiting to see how things pan out over the next few months maybe. However, this can still be the right time for some to take the step into franchising. Different sectors are affected in different ways too of course, but many remain strong and with sustainable growth next year. For example, the food and drink sector continues to be lively (for good quality products with a differentiated offering) as does the property improvement & home services sector.
We may well see that rise in unemployment levels the Bank of England have predicted, but on the positive front for the franchising world, challenging employment markets can mean people turn to becoming masters of their own destiny and so are potentially seeking self-employment under a ‘safer’ route.
Of course, buying a franchise business does not guarantee success, the onus is still on the franchisee to develop their business within the framework of the system they have bought in to, and have the same dedication and resilience any other new business owner needs. That said, it is worth reminding ourselves of the benefits of getting into an established model:
- You have that immediate access to the know-how and experience of the franchise and its existing network. There will be a period of initial training to get you up and running in your business, but that ongoing expertise around you to help you get established is a major boost.
- It will take time and money to establish your name and brand if you start on your own, whereas the franchise will have already gone through that process, so you’ll be able to leverage that branding from day one.
- There will no doubt be some level of sales and marketing support. This does vary dependant on the market and the franchise structure, but you will have support in marketing your business (the established website for starters), probably a social media presence and centrally marketing campaigns that you can drive locally.
- There are always the incidental costs in starting your own business that can mount up. The technology & software you may need, setting up your email accounts, bookkeeping support etc. All of this can be done for you within a franchise package, don’t under-estimate the advantage of the ‘business-in-a-box’ concept.
- Also, on-going research into new products and services that your target customers may need will be part of the franchise. Staying ahead of market trends, or at least keeping up with them, is a key part of any successful business. Within a franchise structure much of this will be done for you, and importantly, in conjunction with your input.
- Potentially you’ll have a protected marketing territory for your business.
- Finally, and arguably the biggest one of all in these tough economic times, is that you are part of a community. There will be others in your network that you can talk to, bounce ideas off, work together with to find solutions etc. You are never alone in a franchise. You have the freedom of being your own boss whilst still having that support network around you.
So overall our outlook for 2023 is one of cautious optimism and promise. Whatever you are looking for, whatever your previous experience or future interests, there is a franchise out there for you somewhere.
Quality franchises have survived the previous ups and downs in the economy and will do so again. As you think about your own 2023 ambitions take a good long look at those franchise opportunities out there and remember that the well tested rationale for franchising still holds strong!
This post was written by Rob Hall, Franchise Consultant at Ashtons Franchise Consulting and first published by Business Franchise Magazine.