From McDonald’s to Subway to service stations and retail outlets, franchises are a major player in the U.S. economy, supporting more than 7.6 million jobs and $674 billion in economic output from the more than 700,000 franchise establishments.
As the economy attempts to recover from the coronavirus pandemic, there will continue to be new opportunities to get a taste of entrepreneurship – while benefiting from a prearranged structure and name-brand recognition – through franchising.
In honor of Franchise Appreciation Day this Aug. 29, Greg Bell, a business consultant for the Cal State Fullerton chapter of the Small Business Development Center (SBDC), discusses franchising in the 2020s, with a particular emphasis on food-based businesses.
What are some of the benefits of owning a franchise?
I believe the best part of owning a franchise is the shared efforts of promoting the brand. You are not on an island by yourself trying to promote. You are part of a larger family working to promote the family business.
What is the most significant trend in franchising right now?
The food industry is going in so many directions, good and bad, during the pandemic. Really the out-of-the-box thinkers are the new trend. Third-party delivery, ghost kitchens [a kitchen designed specifically for delivery without dine-in] and drive-thrus are all areas I have been watching. As existing franchises flex and bend to adapt their operations during and coming out of the pandemic, I believe we will see great ideas we were sorry we didn’t think of. But, with an innovative franchise, you may have the opportunity to jump on board the success.
How can a franchisee [a person operating a franchise location] or potential franchisee succeed in the food industry?
As in any food industry role, the franchisee needs to understand all of their costs and potential for profits. While a franchise is designed to be a turnkey operation from the franchisor [the owner of the franchise], it is important to understand how the key is turned and supported. There are many opportunities out there. I would look for one that has more experience or a larger base of operations. Industry experience is very important on both sides of the franchise. And, it is still location, location, location.
In what ways is the SBDC supportive of franchisees?
Anyone considering a franchise purchase should absolutely use the free services offered at the SBDC office near them. Our team will help them understand the costs and potential in projections and analysis before they take that step. If a franchisee is already in business, the staff at the SBDC can help them understand their position and what is needed to meet their goals. Prior to signing a franchise agreement, you should also check with the California Department of Business Oversight to ensure that the franchise is registered with the state and in good standing.
For More on the SBDC
Cal State Fullerton’s SBDC, which serves Orange County, the Inland Empire, and Southern California mountain and desert communities, is committed to providing instruction, support and connections for entrepreneurs in every field as they seek to launch their concepts, with special resources during the coronavirus pandemic.
Read more of our articles on small business development.