FBR Issue 1 - 2021

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FBR SPECIAL REPORT Multi-unit franchise owner Kyle Norcut of Two Men and a Truck. 2020 Highlights Franchising’s Greatest Strength: Community Franchise Owners Work Together to Overcome Challenges It goes without saying that 2020 was a year unlike any other in recent memory. As we usher in the new year with the prospect of a vaccine and economic recovery, many small business owners are feeling hopeful and optimistic. Every year we look forward to talking to franchise brands and franchise owners, but this year, under such abnormal conditions, we were especially curious to hear how they have adapted, changed, persevered, and grown. This year marks our 16th annual Franchisee Satisfaction Awards and the naming of the Top 200 Franchises for 2021. We surveyed over 28,000 franchisees at more than 300 leading franchise companies to find out exactly how satisfied they are with their franchise business—an especially intriguing question in 2020. Did being a part of a franchise system help or hinder business owners this year? Were franchise owners still satisfied with their choice to invest in their franchise? We combed through the data and interviewed franchisees at some of this year’s top-rated franchise brands to hear what they had to say. Their feedback provides a glimpse into the benefits of franchise ownership during a volatile market—and offers helpful information for prospective franchisees. 6 | For more information on the companies in this report, visit www.FranchiseBusinessReview.com
FBR SPECIAL REPORT THE ECONOMIC TOLL OF THE PANDEMIC In most down markets, franchising witnesses an uptick, with greater numbers of unemployed people looking for an income stream and a new opportunity they can control. As Maryellen Torres, chief brand officer at Fyzical, a physical therapy franchise, remarked, “More than ever before we are seeing remarkable interest from people of all backgrounds. People want to take control of their future rather than relying on a corporation for a paycheck that can be taken away at any time.” Still, the pandemic hit businesses hard and unevenly, with certain segments of the economy suffering enormous blows, while others have remained steady or even prospered. For the travel industry, the economic impact of the pandemic has been severe. Dream Vacations, a top-rated travel agency franchise with 80% of its business focused on cruise sales, saw business come to an immediate halt in March. Not only were cruise sales stalled, but domestic and international travel came to a standstill as well. “Our franchise owners get paid their commissions when people travel, not when they book—so there were several months where our franchisees were receiving little to no income,” said Debbie Fiorino, chief operating officer. “Fortunately, many of our travel partners made the decision to protect commissions and were paying our franchisees on cancelled sailings.” With multiple vaccines on the horizon and significant pent-up demand for vacations, the travel industry is optimistic for a strong recovery in 2021 and beyond. At a TWO MEN AND A TRUCK location in Texas, sales were also impacted early on, but by June they were outproducing their budget by a larger margin than expected, explained Chad Arnold, franchise owner of Two Men and a Truck in Dallas Fort Worth. This rebound was likely a result of the uptick in the housing market, which saw a boom over the summer. “Overall, although the economic impact has been harsh on many, we did not see a negative impact on people’s ability to relocate, purchase a home, or need internal moving services,” said Randy Shacka, president of Two Men and a Truck. “In fact, our system has finished 2020 with record months for growth in the 4th quarter.” Fort Worth, TX Maid Brigade franchise owner Keith Clem checks in with his employees. Jackie Asti, a Maid Brigade franchisee in Colorado, says that her total revenue was down about 20% while her expenses were up about 10% due to additional costs for PPE and new cleaning supplies and methods. “So, my profits are down significantly,” she says. “But we are still open and operating, and that is good!” In fact, not a single location closed in 2020 due to the pandemic, according to Raychel Leong-Sullins, president at Maid Brigade, who says that several locations have actually grown during the pandemic due to their ability to quickly add PUREmist Commercial Disinfection to their businesses. System wide, Maid Brigade’s October 2020 revenues were at 85% of where they were during the same period in 2019, with sales trending upwards. Jason Howell, VP of franchise development at 360 Clean, says the pandemic has been very positive for their franchise system, with service requests increasing. “Our franchise owners have been able to offer our healthfocused cleaning system to new clients and expand services with existing clients. As a franchisor, we have seen more people wanting to start their business journey in the janitorial industry, which continues to see rapid growth,” remarked Howell. A cleaning business doing well during a global pandemic isn’t completely surprising. But with high unemployment rates, what is surprising is the boom to certain retail concepts like Wild Birds Unlimited. Surprising that is until you consider how many people are now working from home with travel plans, dinner dates, and social meet ups on hold for the foreseeable future. The homebound are looking for new hobbies and bird watching is a great option. “Our stores are doing better than ever, we are getting more new customers and we are still awarding new and transferring existing franchises to new franchise store owners,” said Paul Pickett, chief development officer of Wild Birds Unlimited. “We are actually doing very well. Same store sales are up nearly 16% and new customer acquisition is stronger than ever in our brand’s history.” Similarly, at Nothing Bundt Cakes, a franchise bakery concept specializing in delicious bundt cakes, sales soared after an initial dip in March. “We started to see an uptick in sales, and around Easter and Mother’s Day, we hit record sales and maintained that momentum,” said Kyle Smith, president at Nothing Bundt Cakes. For more information on the companies in this report, visit www.FranchiseBusinessReview.com | 7
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