2022 Franchising Predictions
Franchise Thought Leaders Reflect on 2021 and What the Future Holds for Franchising
Last year, we asked franchise thought leaders to share their predictions for 2021. The world was seemingly recovering from the upheaval of the pandemic and there was a sense of optimism, and, on the whole, the predictions came true.
Certainly, one of last year’s key themes was investing in employee engagement, with top talent becoming harder to find and retain, but perhaps no one could have foreseen The Great Resignation and the drastic effects the labor shortage would have on the economy.
Naturally, hiring and retention will be crucial in 2022, as will all relationship “soft skills”, from development teams nurturing candidates to FBCs supporting franchisees to being attuned to customer desires. So what else does the future hold for 2022? See what franchising thought leaders are predicting.
1. Candidates dropping out for a “dream job”
The 2022 franchise buyer will look different due to the world around us. What turned into a labor shortage in 2021 is now a full blown economic shift moving towards the workers being in the driver’s seat. This is causing candidates to drop out of the process when they land their “dream” remote work job with a company understanding that talent is more important than requiring them to sit in a cubicle at the corporate office.
This will cause disruption for franchise development teams as they are left with a prime territory ready to sell to the next buyer. I am seeing this mentality daily so I am now preparing my future franchisee for this issue by creating a hard decision making timeline, and making sure to address it with the franchisor when the introductions are made. Franchisors will need to be very transparent to incoming owners about the success they can have if working during the start-up process. If the model doesn’t work without an owner-operator, I most likely would not show it to begin with, and most importantly, they will need to meet owners that are successful doing both.
– Megan Allen, Market President and Franchise Owner, FranNet of Colorado
2. Private equity doubling down
My prediction from last year was clearly not brain surgery yet true. The prediction that some turbulence would create life/career changes and encourage franchising was accurate. However, above that has been this great resignation—which is prompting more entry-level buyers into franchising.
The biggest impact in franchising this year will be that properly capitalized equals big opportunity. Private equity buyers will continue to look at franchising as a viable addition to its portfolios. Thus, franchisors who accelerate growth may increase its valuation and find a viable exit in 2022. Thus, even though franchising will remain steady, I predict even more consolidation through family offices, PE and, probably most impactful—groupings of brands that have tremendous data on a category (homeowners with home services; health and wellness with membership services; food brands with food chain management).
– Nick Powills, CEO, No Limit Agency
3. Growth despite manpower shortages
The changing landscape of labor continues to be one of the major challenges for any manpower focused service business. Fortunately, franchising tends to bring the most cooperative and committed employees, which has been a positive outcome for Visiting Angels. There will always be a place for employees that seek a “passion’’ component like home care where taking care of others is a life mission. The health-risk component of the past two years has certainly caused many to sequester themselves and withdraw from the marketplace until financial requirements bring them back. Hopefully, this dynamic will change over time; however, we will continue to grow even with a more limited workforce.
– Dave Ritterling, Vice President, Visiting Angels
4. Franchisee focus on culture to combat labor issues
Franchisees’ top challenge will be people, and franchisors need to be ready to help with those challenges—without crossing potential NLRB lines. Provide tools franchisees can (but aren’t mandated to) use to hire more quickly, and hire the RIGHT people. Franchisees are going to have to focus on their company culture: What makes people want to apply, say yes to working there, and stay? How can they use a stellar culture, including how they help their people grow, as a way to hire?
– Michelle Rowan, President & COO, Franchise Business Review
5. Innovation and change to reach customers
We saw throughout the pandemic that the companies that thrived were able to adapt and overcome change quickly. Franchising will continue to see new innovations and initiatives rolled out to better serve the needs of tomorrow. Brands have learned to ‘embrace the new normal’ as pre-pandemic days are over. When pet ownership and adoption rates skyrocketed, we pivoted quickly to adapt to evolving consumer needs by offering omni-channel shopping options featuring 1-hour curbside delivery, delivery from store, prescription fulfillment, and auto-ship services. This proved to be a win for our neighbors (customers), as 40 percent of pet food purchases stem from same-day need, where next day delivery just doesn’t cut it. While many of our neighbors have returned to in-store shopping because they missed the high-touch experience we provide, they are happy to know that they now have the option to shop with us how they want and whenever they want—either in-store or online. We’ll continue to see franchise companies add new services to meet and speak to their customers how they want to be reached.
– Chris Rowland, CEO, Pet Supplies Plus
6. Nimble workforce = success
The great resignation, employees demanding work flexibility, Omicron variant, inflation, Zoom fatigue, and who knows what else the new year will throw at us. The pace of change in business, workforce, and financial markets is unprecedented. Everything is sped up (way up) which reminds me of an Andrew Carnegie quote: “Take away my people, but leave my factories and soon grass will grow on the factory floors. Take away my factories, but leave my people and soon we will have a new and better factory.”
The companies that thrive in 2022 will be the ones that think about, obsess over, and pay very close attention to their people. Not some slogan on a corporate wall, but the ones who care deeply in their bones about their people. This isn’t because of some soft science like “culture”—it has to do with ruthless business logic. The companies with the most engaged people will be able to be nimble regardless of size heading into 2022. That nimbleness is what it will take to succeed. The ability to adapt to unprecedented pace and the unforeseen will require a more engaged, more nurtured and more motivated workforce than we’ve needed in a long time.
– Keith Robinson, Chief Strategy Officer, NextHome, Inc.
7. Privacy changes and recruitment
One major challenge for brands in 2022 will be the changes in third-party data. There have been a lot of privacy changes that affect how you can advertise on Google, Facebook and Instagram, and the restrictions will go even further in 2022. You will need to make sure you have implemented every platform’s best practices or followed their recommendations, being cautious with how you use first-party data, such as people’s email addresses or phone numbers.
These changes have many of our clients advertising more on LinkedIn, especially for franchise recruitment or business-to-business advertising. On LinkedIn, users update their own information on education, jobs and even salaries, which makes it valuable first-party data.
– Lora Kellogg, CFE, President and CEO, Curious Jane
8. FBCs key to driving profitability
The role of the FBC is one of, if not the most important role in a franchise organization, as this is the individual who really drives franchisee profitability. If a franchise company wants to grow, it must understand that the number one driver of franchise company growth is profitable franchisees.
With the increase in companies using the franchise model for growth, there is increased competition for franchise candidates. While the economics of the business must be attractive, the franchise candidate is getting more sophisticated and looking at the depth of support being offered.
With the ramped up awareness about the importance of actively coaching franchisees to optimize profitability, the folks in the FBC role will need to have strong leadership skills. Some examples of the leadership skills that will result in more profitable franchisees include understanding how to create buy-in, how to hold franchisees accountable to their goals, how to manage conflict, and active listening skills. Gone are the days of simply being a messenger between the home office and the franchisees in the field.
– Angela Cote, CEO, AC Inc.
9. Changing workplace “norms”
As we look ahead to 2022, it becomes very clear that many of the changes that were made to survive the pandemic are here to stay; one example is virtual meetings. I can honestly say that prior to the pandemic I had participated in very few virtual calls or meetings. Today, it seems strange to schedule a regular phone call! I do not think we will put virtual calls and meetings back on the shelf. Another example is working from home. Our team has not returned full time to the office, nor do we intend to. The pandemic taught us that we could work from home very efficiently and effectively. I am old school, and it took a while for me to get on board with the whole idea, but I must admit that I now enjoy the flexibility that working from home allows. The technology and tools that we were all forced to adopt, have now become a part of our lives. I am sure that each and every franchisor can point to some specific changes or modifications that they had to make during the pandemic that are now a regular part of doing business.
– Jania Bailey, CEO, FranNet
10. Poor employee recruiting practices exposed
There is no doubt that the pandemic and aspects of available unemployment income have played a major role in the labor issues that employers have faced over the last year, but what has occurred over the last year or so has also exposed poor recruiting, hiring, and employee development processes.
These poor or in some cases non-existent practices have been exposed and that has made it even tougher on many businesses. I think many businesses will be better for it in the long run, but you’ve got to stay committed to an employee recruitment and development process at all times. This aspect of running a business cannot be a reactive process in your business.
– Barry Bodiford, Founder & CEO, 360clean
The Franchise Talent War: Which Brands Will Win and Which Will Be Left Behind?
A recent study of employee engagement in the franchise sector reveals key insights for 2022.
11. Candidates are more educated than ever
Franchise candidates are going to be more prepared than ever by the time they reach your development team (or website form). Make sure you have content available that tells the story of your brand and franchisees that are succeeding today. Use stories and third-party sources to add credibility to your offering. No one wants to deal with a flashy salesperson and be “sold” anymore. It’s all about building relationships and providing transparency and information to get them through their discovery.
– Michelle Rowan, President & COO, Franchise Business Review
12. Leadership skills in hiring and retention
The ongoing labor shortages are forcing franchisors and franchisees to really focus on creating a culture that attracts and retains employees. In other words, franchisors and franchisees need to continue to be competitive with compensation offerings but also need to create systems to ensure employees feel heard, provide growth opportunities, flexibility and an overall environment that matches the employees’ needs. Franchisors and franchisees will need to tap deep into their leadership skills and likely need to invest in professional development to stay competitive and tuned in to employees’ needs.
– Angela Cote, CEO, AC Inc.
13. Changing consumer demands
Looking back at 2021 predictions, I think it’s safe to say we were correct about the need to embrace hyper transformation. The only thing that I may take back is saying that would be a change for the “post-pandemic landscape” since it’s still clearly a factor for so many businesses. Nevertheless, it has proven that companies who were proactive about the new work environment saw success that could set the foundation for 2022 and beyond.
This year will again be defined not only for how you attract and retain top talent but also how you ensure the quality of your product or service meets the increasing demand of clients and consumers. It’s not just that our work habits have changed. So have spending habits, along with expectations for service – whether it’s pricing, attentiveness, or even as simple as open business hours. It will be essential for businesses to understand exactly where they can afford to adjust these factors in the new year, whether fundamentally or even on the margins. Ensure you’re familiar with any remaining support programs that can help in the transition and understand the effects of any possible legislative changes coming down the road.
– Sean Manning, President & CEO, Payroll Vault
14. A focus on work-life balance
2022 will be a comeback year for many industries, including ours. With the pent-up demand for travel, and more people re-evaluating their work life balance, we predict there will be a re-emergence of travel advisors, or people looking to have more control over their destiny, and a home-based franchise will be the ultimate choice. In addition, our product—travel—plays into the desire of achieving a better lifestyle and creating memories for not only the consumer but individuals who see they can combine their love of travel with a strong business opportunity. The only factor that could affect sales or growth for us, are the restrictions or changes that happen due to the pandemic, which is beyond our control. Our travel sales have increased over 35% from this same time in 2019, so we are optimistic that the worst is behind us and that cruising and travel in general will be back stronger than ever, and we will more than pick up where we left off.
– Michelle Fee, Founder and CEO, Cruise Planners
15. Creativity and flexibility in attracting talent
Last year, my prediction was that brands would re-imagine the infrastructure of people and teams. Many businesses have taken the opportunity to operate virtually or some hybrid therein which has allowed them to fill positions with talent and expertise and those who have a stronger fit within their culture. We also saw some pretty big moves in franchising with our younger rising stars who made noise on social media during the pandemic. A strong social media presence gave them a chance to shine and become known in our industry. I think this trend continues through the next year! People will be the star of the show and bringing the right people on the team will be a priority, no matter how creative a brand has to get.
– Liane Caruso, SVP, Entrepreneur
16. Continued candidate caution
Making predictions is hard enough during what used to be called “Normal Times”, making them during a long lasting pandemic that has had major economic impacts on the whole world is even more of a challenge. Here at Wild Birds Unlimited, Inc., we were fortunate to experience record breaking top and bottom line results in our individual stores. Anxiety about supply chain, labor shortages, and potential limitations on access to capital created a moderate prediction for our 2021 franchise development activity, but our prediction was inaccurate. We had an amazing year and exceeded all of our franchise development goals in 2021.
That being said, 2022 may be a very different year. We predict that the ongoing pandemic will result in candidate caution, access to capital is expected to be an issue and labor shortages, especially in the retail sector, continue to be issues that we are dealing with in our conversations with qualified candidates. Lead flow continues to be a bit of an issue for us and for many of my peers at other brands and the time frame to consummate a signed Franchise Agreement is growing a bit longer. We are still bullish but know that making predictions will be a challenge again this year. This is a great time to review all marketing efforts and collateral and to ensure that we are bringing in the best new franchisees possible and to stick to our focus on quality versus quantity.
– Paul Pickett, Chief Development Officer, Wild Birds Unlimited
17. Go slow to go fast
2021 delivered a recovery wrapped in uncertainty. Many industries are benefiting from pent-up demand after lockdown, while being challenged with supply chain issues that will continue well into 2022. Winning brands will take more time to gather and leverage data to build confidence in their initiatives. Customer research, pilots and benchmarking will be even more important to transparently demonstrate the ROI of brand programs and investments with franchisees. This added diligence will pay off with faster adoption and better results.
– Jayson Pearl, President, ServiceScore
18. Tech instead of people
The pandemic has led to an increase in the technology people use to automate processes, and may even lead to technology replacing roles. People are getting more comfortable with technology because they have had to, from Zoom to QR codes. This may lead to lower labor costs for franchisees, with less hands-on work required in some situations.
– Angela Cote, CEO, AC Inc.
If employee recruitment and retention are a concern for your franchise organization, download our free guide and you’ll learn:
- Top 5 franchise employment trends
- Salary benchmarks for corporate franchise roles
- Most common benefits offered to franchise employees