Despite The Headwinds for Franchise Lead Generation, These Tailwinds Will Make 2022 the Best Year for Franchise Sales in Many Years
January 13, 2022 – First, the bad news. Supplies will be tighter, and costs higher for building a pipeline of franchise prospects given:
- Increasing Competition with Employers – Growing franchise systems will be competing with desperate employers who are offering better pay and more flexible work conditions to retain or add team members in an environment of 3.9% unemployment, compounded by the “Great Resignation.”
- Increasing Lead Costs – Franchise lead costs will increase because franchise development budgets are increasing as systems compete for the best prospects, and
- Diminishing Targeting Options – The blocking of third-party cookies by Mozilla and Safari pale in comparison to the impending Google Chrome cookie phase out in 2023 given its near-70% market share. Retargeting options will continue to exist for users who have already visited Google, Facebook, or your own site, but you will no longer be able to target prior visitors across sites.
The arc of efforts to improve consumer privacy, from Apple’s features that impair email measurement and block “unknown” callers, to legislative actions in response to concerns over social media will no doubt bend towards more restrictive targeting. On the other hand, the digital advertising ecosystem is working hard to create effective alternatives, and will likely succeed.
The Tailwinds that Should Make 2022 the Best in MANY Years
Despite the disruption, destruction and loss of life of the pandemic, a number of trends – beyond the huge impact of the resumption of normal business and human activities – will support a substantial rebound in franchising and growth in franchise sales.
1.Household Wealth Soars
As seen in the Federal Reserve Economic Data, household net worth grew rapidly as consumers increased their cash reserves, reduced outings for food, entertainment and personal services, and postponed travel.
2. Household Debt Plummets
Consumers moved to reduce debts as a percentage of personal income for safety, and at the same time faced shortages of big ticket items like vehicles. Household balance sheets grew in assets (primarily financial assets and real estate) and reduced liabilities at the same time.
3. Business Formations Will Continue to Surge
The Census Bureau reports applications for Employer Identification Numbers (EINs) and reports the number of actual and predicted business formations. The surge that began as the pandemic got underway rivals the wave that ended with the Great Recession of 2009.
4. Demographics Are Destiny, Short AND Long Term
We wrote about how the larger age cohorts of Gen-X and Millennials are converging on the most popular ages that entrepreneurs start businesses back in June.
In the shorter term though, the return to school and return of daycare that frees up more women to pursue franchises, which they are now doing more frequently than men, especially in the younger age cohorts.
5. Optimism About Franchise Ownership Reaches New Heights
The pandemic, despite its disruptions, drove interest in business ownership, given the inherent work flexibility and self determination In our most recent sentiment survey, a record 62.1% of aspiring owners planned to start their businesses within three months.
In June we reviewed what demographics say about the coming decades of franchise growth. While there are many factors — political, economic, regulatory, societal — that influence the preference for franchises over employment or other forms of business ownership, as seen above, the sheer number of individuals with the knowledge, drive and financial assets to start a business is a tide that is surely rising.
Knock on wood, 2022 should be an excellent year for franchise system growth.
FranchiseVentures is the leading demand– and lead-generation platform for potential franchisees to thousands of growing franchise systems in the United States and Canada. Its franchise lead generation brands include Franchise.com, Franchise Solutions, Franchise Gator, Franchise Opportunities, Franchise For Sale, SmallBusinessStartup.com and BusinessBroker.net, and together they provide the largest aggregation of prospective franchise buyers in the U.S.
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Published on Thursday, January 13th, 2022.