Who thrived, who survived, and what 2021 could bring
The tumult in franchising over this year reflects the trends of the COVID economy. Some have raked in money as other usually reliable investments turned sour. With hopeful forecasts on widely available and effective vaccines on the way, things are looking up. If you’re selling quick food with a drive-through or easy pickup option, odds are you’re doing pretty well right now, especially if you have an app. If your model relies on close personal interaction, it’s been a tough year, but things might be turning around in 2021.
Some models were able to adapt to fill an increased demand brought on by the specifics of the pandemic. With schools often online-only or switching back and forth between in-person and remote classes, education franchises have rushed in to fill the void. Kumon Centers math and reading enrichment program jumped to No. 7 in Entrepreneur’s Global Franchises Ranking.
Adding a location per week through the end of 2020, Sylvan Learning Centers instituted a $2.5 million royalty and fee deferral program to get new franchisees off to a good start. “Supporting our franchisees is, and has always been, a priority,” Sylvan CEO John McAuliffe said. “We can’t do what we do best if our franchisees lack the tools they need to be successful. It’s our job to ensure that students can learn and grow in any environment, and what we’ve been able to accomplish in the past few months against the odds is incredible.”
LearningRx has also been focused on helping students avoid falling behind, earning a spot among Franchise Business Review’s top education franchises during the pandemic. “One of the big questions we get right now is regarding the difference between tutoring and personal brain training,” LearningRx CEO Kim Hanson said. “Although both can help students who are struggling, they provide different solutions to different problems. Tutoring delivers material that was missed the first time. For example, if your child is a strong learner but is behind in school due to an extended absence, tutoring can help them catch up on the material they missed. LearningRx’s one-on-one brain training is designed to help improve the weak cognitive skills that help enhance learning in any subject. Our programs target and train the weak brain skills—such as memory, processing speed, and attention—to strengthen the root cause of learning struggles.”
Those weary and worried parents keeping education franchises going are also spending on takeout after a hard day of working from home and child-wrangling. Fast food brands usually dominate lists of most successful franchises, and as such they typically come with the highest price tag to beginning franchisees. But they’ve more than paid off this year as many of us trade dining out for curbside and contactless pickup. Continual innovation with menu items and store design seem to have the big players fighting to retain a large market as rival newcomers such as Burger Lounge seek their own niches.
Spending more time at home has made people notice all the things they’d like to improve about our living spaces. But just because we’re home all the time doesn’t mean we have a lot of time on our hands. That’s made home services franchises all the more valuable in 2020, and the growth rate is poised to keep ascending in 2021.
The pandemic has driven home what people will always need no matter what, the true essential businesses. We need to eat, and we need somewhere to live. Remote work will be a lasting legacy of the pandemic, and the housing market is still going strong. “While I’m confident the world will return stronger than ever, I’m also betting that home services are an investment that will make sense both today and tomorrow,” Boxwood Partners CEO Patrick Galleher wrote in Forbes.
Down But Not Out
Usual old reliables that have seen a downturn in 2020 are fitness and hotel franchises. With group classes and lots of heavy breathing as mainstays of normal routine, gyms have had a particularly rough year. Like everyone else, they’ve gotten creative and tried to keep clients loyal with online offerings and outdoor options. Still, it’s hard to maintain what’s been exponential growth of the past decade when gathering in groups and among strangers is hazardous and your business fluctuates from open to not several times. With promise of a vaccine, though, 2021 and beyond are looking bright for fitness franchises. The demand for exercise and wellness isn’t going away, especially with quarantine lifestyles tending toward the unhealthy side for many people. After a vaccine, gym attendance will make new year’s resolution crowds look tiny by comparison.
With international borders shut for much of the year, travel has been one of the hardest hit industries. Hotels, some of the most expensive franchises to acquire but typically worth it when people are traveling, have seen a huge downturn. Whether business travel will ever return to its pre-pandemic levels remains an open question, but there is so much pent-up demand for leisure travel that bookings are filling up for the next couple of years. The timing depends on how quickly a vaccine can be widely distributed and full occupancy levels legally allowed, but eager travelers will be out in full force to see the places they were cut off from, and they’ll need a place to stay. We know we can’t wait to get out there.