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The pandemic created a ‘tectonic shift’ toward franchising

The CEO of a franchise consulting company said the pandemic was a ‘huge catalyst’ for a renaissance in franchising, while the demographic shift to southern states is also driving interest.

Nick Neonakis, CEO of The Franchise Consulting Company, has a front row seat to what he is calling a “tectonic shift” toward franchising. His company works with some of the most recognized companies in every industry, from automotive to food, and identifies opportunities to help people better understand and obtain franchise ownership.

His takeaway from day one of the 2023 National Restaurant Association Show?

“There is a ton of interest this year,” he said. “A ton.”

In that first day alone – before the show floor closed, even – he said there were about 70 restaurant concepts that visited his booth to inquire about franchising. His anecdotes are backed up by data from the International Franchise Association and FRANdata which finds that total franchised units grew 2% in 2022 and are expected to grow again this year by 3%.  

The biggest driver of this growth, according to Neonakis, is the pandemic.

“The pandemic created a lot of awareness for franchising because people realized life is short. They just changed the way they wanted to live and maybe realized they weren’t happy being the vice president of sales at this company or commuting into the office every day. They liked being home with their families and being in control,” he said. “It was a huge catalyst for a renaissance in franchising.”

There are other factors at play at this moment, however. A demographic shift bringing droves of people to states like Texas, Florida, Georgia, North Carolina and South Carolina, is also causing an uptick in franchising interest.

“Franchising is the easiest way to expand from a north market to one of those fast-growing markets,” Neonakis said.

There is also a relentlessly challenging macroeconomic environment and Neonakis notes that the only way to deal with the inflation piece of that environment is by having pricing power.

“Also, the economy is causing people to think very differently about how they want to make their money,” he said.

Neonakis added that there are two sub-trends emerging in the franchising industry as well. First, the marriage between professional athletes and franchised brands is experiencing a “huge spike.”

“It gives those athletes something to fall back on if they get injured and it gives the brand a major lift from having a celebrity tied to them,” Neonakis said. “Everybody wins in that situation. It’s going to be huge – especially for smaller and younger brands.”

The second emerging trend he is seeing is the growth in minority-owned franchise businesses.

“Historically, underrepresented people didn’t have as much access to capital and that is shifting. There are many programs in place to provide a catalyst for change and that’s a good thing,” Neonakis said. “All of this combined is driving higher interest in franchising. Domestically, it’s very busy.”

Contact Alicia Kelso at [email protected]

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