It’s been a wild year and a half, and investors everywhere have whiplash from the rises and falls of the markets, and the changing attitudes of the people who forecast them. While investor enthusiasm slowed during July and August as conditions with the Coronavirus pandemic changed and intensified once more, Fall is here and all eyes are turning toward 2022.
What will the coming year hold? And is it a good time to find and invest in new franchise opportunities?
The answer is a resounding yes. In this article, we’ll provide an overview of the current state of industry and business economics, and discuss why 2022 could be your year to dive into the world of franchise ownership.
Let’s dive in.
COVID-19’S IMPACT ON FRANCHISING
Like virtually all industries, the franchise market was not left untouched by COVID-19. In 2020 alone, franchise employment dropped by 11.2% to 7.5 million, and the industry lost about 940,000 jobs. Many businesses were forced to operate under reduced staffing conditions due to limited revenue and capacity restrictions set forth at the local and federal levels.
Still, it wasn’t all bad news. According to the International Franchise Association (IFA) annual Economic Outlook Report:
“Overall, franchise businesses contributed $670 billion of economic output into the U.S. economy in 2020, and still represented 3% of the total nominal Gross Domestic Product (GDP).”
Additionally, the franchise industry’s contribution to the economy is projected to grow 7% by the end of this year, reaching its pre-pandemic levels of output by the end of December.
WHAT THE FUTURE HOLDS FOR FRANCHISE ECONOMICS
In a recent session of the IFA’s webinar series, Economic Outlook for Franchising, experts provided the following predictions:
- By the end of 2021, franchising will have recovered to levels last seen in early 2019. This applies to business growth, economic outlook, GDP contribution, and employment.
- The total number of franchised companies is expected to grow at a rate of about 3.5%, which represents a net gain of 26,000 businesses and a total of 780,188 franchise establishments by the end of 2021. This translates to 6,585 more units than 2019’s pre-COVID level.
- Sales among franchise companies are expected to soar to the highest levels since the last recession.
- Franchise employment is forecast to boom, adding about 800,000 jobs in the US and hiring an estimated 8.3 million workers by the end of 2021.
- The industries driving the new employment boom in the franchise industry will be in the retail, services, and food industries.
4 REASONS WHY IT’S TIME TO INVEST IN A FITNESS FRANCHISE
If the statistics above weren’t compelling enough, here are a few in-depth reasons 2022 is projected to be such an excellent time for franchise investments.
1. Unemployment Rates Projected To Sink Below 5% By End Of 2021
Staffing shortages have been a real struggle for business owners in all industries for the last year. As a result, it’s been difficult for companies, franchise operations included, to hit their target revenue numbers and maintain previous levels of success.
Fortunately, the experts believe that trend will turn around in 2022, and that the economy will return to pre-pandemic payroll levels before year’s end in 2022. As unemployment rates decrease and people come back to work, new franchise operations will have their pick of qualified employees who love the industry.
2. Interest Rate Will Remain Low For Foreseeable Future
If you’re anticipating borrowing money to open your franchise operation, low interest rates mean doing so could be a lot cheaper than it once was.
In addition to this, experts are predicting a rising inflation rate in a year or two, which will allow franchise owners to exercise some flexibility in their pricing for the first time in many years. These factors combine to spell a bright financial future for new business owners who invest in a franchise operation this year.
3. COVID Provided New Business Opportunities For Franchise Locations
While COVID-19 changed the way many teams do business, that hasn’t been altogether a bad thing, at least for companies who were willing to adjust accordingly. Fitness franchises, for example, have moved to more virtual one-on-one training, and small-group fitness.
Since Alloy already provided a small-group training environment, the pandemic has really served to hone the focus on small-group fitness and make the program more effective than ever before. While certain sectors, like lodging and full-service restaurants are still recovering, the fitness industry has strong potential to thrive in the post-COVID world.
4. Focus On Health And Well-Being Increasing
One silver lining of the COVID pandemic, at least for fitness franchises, is the increased focus it has placed on health and well-being. During quarantine and lockdown, people everywhere realized that mental and physical wellness go hand in hand. As a result, franchises that focus on a combination of health and wellness are projected to thrive in 2022 and beyond.
2022 FRANCHISE TRENDS ARE PROMISING FOR INVESTORS
If you’ve been considering investing in a fitness franchise, 2022 could be the perfect time. In addition to strong economic outlooks and employment projections, there’s more of a need for fitness franchises now than ever before.
While the COVID-19 pandemic has created a good deal of uncertainty for investors, Alloy is here to offer the support, name-brand recognition, and industry research new franchise owners need to start and maintain a successful business.
By combining personal service, cutting-edge technology, and more than thirty years of experience presenting a successful franchise formula, we drive outstanding results for both fitness franchise owners and our clients. Even now, our revenue per member and retention rates are some of the highest in the industry.