Through pivots, adaptations and innovation, United Franchise Group’s 10 brands—with a presence in more than 80 countries—have managed to navigate the pandemic conditions with respectable results. I talked with CEO Ray Titus about the company’s experience in 2020 and its expectations for the near future.
Within months of the COVID-19 virus outbreak, the group turned things around and increased franchise unit sales in most jurisdictions to pre-pandemic numbers, as well as increased franchise development opportunities globally.
One example is Venture X, a coworking concept with virtual and physical office solutions. During the pandemic, Venture X intentionally and systematically tilted to the virtual solutions side of the business. The appeal and popularity of the virtual offering over physical office space was clear. Moreover, Venture X continued to expand internationally, opening locations in India, the United Kingdom and Costa Rica. Venture X expects demand for virtual office solutions will continue, but as the world establishes a new normal, there will also be growing demand for physical coworking space.
The shutdown of the global economy caused businesses to transition out of retail spaces and business environments, and instead move into home offices. In response, one might expect custom signage brand Signarama to have fallen on hard times. But the brand pivoted to supplying sneeze guards and other plexiglass solutions as well as floor graphic signage. The result was an improvement in franchise unit economics.
Titus said the communication between the franchisor and Signarama’s franchisees was constant at the beginning of the pandemic. “When you’re in the battle, you have to win today, this week, this month—it’s an ongoing challenge,” said Titus.
The group’s other brands also worked hard to pivot, adapt and innovate. Fully Promoted, a promotional products and business branded merchandise concept, pivoted to supplying masks, gowns, sanitizer and more. Jon Smith Subs and The Great Greek shut down in-restaurant dining and focused on catering, delivery and pickup. Shifting the business model and adapting accordingly helped even these restaurant brands exceed pre-COVID economics after just a few months of the pandemic restrictions.
Transworld Business Advisors business brokerage was able to capitalize on the pool of skilled professionals who were searching for new opportunities as a result of the shutdowns. Experimax, which specializes in buying, selling, trading and repairing used electronics, experienced its highest volumes during the pandemic. With other computer and electronic stores closing their doors, there was less competition in the space and the explosion in online activity—from schooling and childrens’ programs to shopping to home office establishment/refurbishment—caused demand for used computer and electronics to skyrocket.
When asked about some of the quintessential things the group did during the pandemic, Titus said the company doubled down on communications with franchisees and other key stakeholders, such as suppliers, by scheduling weekly calls across the globe. A great deal of research and development was undertaken during that period.
“The reality is that we bunkered down for weeks on end and thought about what direction to take and what products and services to focus on, looking at the statistics, what customers were looking for, and then pivoting, adapting and innovating accordingly. I believe that most franchise businesses could have pivoted and reinvented themselves to make it through the pandemic,” said Titus. “COVID-19 presented a different set of business circumstances. Those that were able to modify their business model to adapt, could survive and thrive. Those that had problems before COVID-19 were certain to struggle in the harsher business conditions.”
Opportunity lies ahead
Titus said a number of advantages and opportunities have materialized from the pandemic and he believes there has never been a better time to establish the right kind of franchise. Prior to the pandemic, he explained, the biggest challenges facing new franchise owners included securing a key location, negotiating a fair lease, securing quality staff and dealing with stiff competition. During the pandemic, there has been less competition, a high number of skilled and qualified staff available for hire, and improved leasing opportunities.
On the international front, Titus found there was hesitation for the first few months of the pandemic, but for the above reasons and others, the appetite for international franchising came back by early summer.
Another main driver for this was the large number of skilled professionals looking for their next business opportunity. The group found this filled a major void of quality prospective franchisees, particularly in countries such as Switzerland and Germany.
What should international franchisors focus on? Titus pointed to the ongoing identification and implementation of technology within franchise systems. Around the globe, discovery days will continue via video conferencing solutions. This presents challenges for prospective restaurant franchisees who ideally would taste-test the offerings. However, deals are getting done in the restaurant space without the prospective franchisee ever tasting the products.
International brands are also increasingly moving to online signing platforms to formally consummate transactions. International franchising has never been more streamlined, efficient and fully online. These are but a few examples of how technology has, and will continue to, transform the international franchising space.
A few final words with Titus included a discussion of the uneven recovery among the global economies. “There are some countries that are not going to bounce back as quickly,” said Titus. International franchisors need to take a flexible approach to working with different jurisdictions, understanding the specific impact of COVID-19 as it relates to business and consumer confidence, government regulation and shifting demands.
Andrae Marrocco is a partner and co-chair of the Franchise & Distribution Group in the Toronto office of McMillan LLP. His column World View covers international franchising in each issue. Reach him at email@example.com