Franchise Growth Continues Despite COVID-19
Despite the global pandemic and the potential for economic turmoil ahead, franchise growth charges forward, spurred by the entrepreneurial spirit that sees opportunity everywhere.
At Super Chix, CEO Darryl Neider said everything took a short pause in the early few weeks when the pandemic brought intense confusion. But the development pipeline has reopened, even if it’s moving a little slower. The seven-location chicken chain that Neider and team revamped since buying two years ago was aiming for seven new locations in 2020. Now, it’s aiming for four to seven, as the COVID-19 crisis has pushed some of that back.
“All the deals we were working beforehand, they’ve all come back. But I will admit, they are moving a little bit more slowly. And that’s 100 percent understandable. And interestingly, what’s making them move more slowly is people want to take advantage of SBA lending which wasn’t available before,” said Neider. “I’m not talking the PPP stuff, but the SBA has altered their programs a little bit to benefit startups.”
The overwhelming surge of the Payment Protection Program (PPP) has slowed down all SBA functions, but Neider said the help there will get development going. Potentially, with SBA financing it will allow growing franchisees to expand faster than they had originally as opportunities emerge in real estate. He said the company is already seeing changes in real estate. That also took a short pause, but the projects they were working on before COVID-19 hit are moving again, and some are looking even better than before.
“That really put a big pause on a lot of the developers and shopping center owners weren’t working on any deals. We had all of these LOIs [letters of intent] and we had made offers before the coronavirus hit, and were just working through responses,” said Neider. “But now they’re coming back and we’re seeing better structures, better pricing and we’re finding real estate that is opening up that is better than we were seeing just eight weeks ago.”
He said this is the entrepreneurial spirit on full display, that unique way of finding the good in any situation.
“We are seeing in general people want to be positive, people want to be positive and find the right kind of opportunities and move forward,” said Neider.
There are plenty of other examples too. Buffalo Wild Wings opened up a new off-premises and delivery-focused prototype dubbed the “GO” model. With lessons learned from the handful of Express locations the company built, it’s tailor made for social-distance operations. On the service side, the nascent Koala Insulation rolled out a development incentive of a fee-free startup marketed toward unemployed workers out there who, like many brands saw in the last downturn, are looking to use their un-planned sabbatical to start something new.
At NuVinAir Global, the COVID-19 pandemic may prove to be a boon to growth. The company, which provides cleaning services for auto cabins and a hygienic vapor that removes surface contaminants, is marketing the health and cleanliness aspects during COVID-19 to expand. Minnesota-based franchisee Jason Freeland just spun up his own growth strategy since starting up in April and has pushed that mindset to expand dramatically with car dealerships during the pandemic, especially with auto dealerships.
“As I started reaching out to contacts, a lot were saying initially, ‘This is a bad time, we’ve cut our vendor contracts.” But as I go in and talk to them and let them know what NuVinAir can do for them and their customers and how we can do this process in seven minutes and provide a new service not offered in the marketplace, they get it,” said Freeland. “With these dealerships, the sky is the limit. We can sell it in the service bay, which is really attractive. And then treating all the used vehicles too, because nobody is going to look at a surface the same way again.”
While the company is careful not to say they cure COVID-19 (thought it’s working with the EPA right now), the service offers peace of mind to customers and more revenue for partners.
“Yes, sales are down and traffic is down, so I’m helping put more revenue in each of those vehicles,” said Freeland.
He said the entrepreneurial spirit is thriving, and the opportunities out there remind him of the last recession-era rodeo during which he expanded the service franchise Re-Bath as CEO of the company.
“You think back to the last time we went thought something like this, everyone was freezing and doing nothing. I opened another franchise at that time and was able to capture market share and grew at that time, you can be paralyzed by fear, or you can adapt to what’s going on,” said Freeland. “Times are going to change, but how we adapt is going to determine our success.”
He said he’s still aiming for $1 million in revenue in his first year and to expand further as automotive outlets like car rental businesses re-open.