By Romal Bryce
With the COVID-19 pandemic continuing to put financial pressure on businesses across the country, franchise owners are looking at two distinct techniques to ensure they remain viable now and in the future.
The first is adapting existing business models to suit the new normal, while the second is adopting new techniques, processes, marketing, and distribution models to discover new growth opportunities available to them.
The first place to start for any business is to analyze the revenue stream. This will vary depending on the type of business, for example, a fitness franchise, restaurant, or focused on health and wellness.
Analyzing the revenue stream needs to be grounded in a detailed understanding of the franchise’s customers. As well, it will be important to determine how many customers need to visit the business (in store or virtually), the number that will actually buy, and how much a franchisee needs to sell to them. Once there is an idea of this, one can look at different options to help meet these targets.
Colour (just) outside the lines
As a result of the pandemic, operations for most franchises have been disrupted. Revisiting the business model and looking for new ways to meet the needs of current clients or attract new ones will help identify ways to stabilize revenues and maintain market share.
For a restaurant, tapping into delivery can be a great option, as it can be a good way to boost sales and get product in front of more customers. It can also present a good opportunity to cut back costs; an increase in delivery means the business’ physical location can be scaled down.
Virtual cooking classes are another potential option to keep the client base engaged.
For fitness or wellness-oriented franchises, a digital/online presence could present an opportunity. With people spending more and more time in their homes, it is a way to encourage activity and lead virtual workout sessions. If a business aims to bring people together for physical activity, consider holding classes in the park during periods of warmer weather. The key is finding opportunities that are an extension of the area the business operates within.
When revisiting one’s business model, e-commerce will benefit virtually every business. An e-commerce platform will help a business tap into more virtual consumers while also allowing the business to offer a more robust menu of products or services.
Thinking about growth
The financial effect of the pandemic has led to many franchisees who were either winding down their businesses, considering selling or, in some cases, closing.
For franchisees that are in a strong financial position, there may be an opportunity to acquire other businesses and grow market presence. The advantage here is that, with multiple franchises, they can weather downturns in revenue in one location if another is performing better. As well, multi-unit owners have the opportunity to scale and expand quickly. This can be in an existing market to increase share or in different areas or provinces.
Franchising continues to present an excellent opportunity for business success. But as everyone continues to navigate the uncertainty that COVID-19 has brought, it is more important than ever to revisit one’s business model and find opportunities to keep the business intact and, where possible, growing.
Romal Bryce is the director of growth and strategy, diversified industry sectors, for BMO Bank of Montreal (BMO). Visit bmo.com/franchising for more information.