New Deal - changing times bring more opportunities in franchising

Pankaj (Phil) Mannan seized an opportunity tostart his own business with Cleantastic despite the pandemic

Changing times have created more opportunities for franchises and franchise buyers

The past two years have thrown up a lot of challenges. Lockdowns, alert levels, traffic lights, mandates and MIQ have all been changing constantly as the coronavirus itself has mutated – and businesses have had to change, too.

‘The important thing to remember is that change creates opportunity,’ says Daniel Cloete, National Franchise Manager for Westpac. ‘Many franchises have adapted and improved their business models, and some sectors have forged ahead. Even sectors which were badly hit, like hospitality, demonstrated after the 2020 lockdown how fast they could bounce back. While there were some inevitable closures, these have created gaps in the market – and new opportunities.’

Pankaj (Phil) Mannan is just one of the new franchisees who have seized the opportunity. He took up a Cleantastic franchise in Hawkes Bay in May 2021 on a part-time basis, but it went so well that he soon gave up his regular job to concentrate full-time on his new commercial cleaning business, along with his partner Ashpreet.

‘He’s doing a fantastic job,’ says Greg Paget, the franchisor for Cleantastic NZ. ‘He saw an opportunity and went for it, and now he’s getting the benefit.’

Pankaj (Phil) Mani, Cleantastic franchisee

Photo image: Anil Dumasia

Explosive growth

Commercial cleaning is one of the sectors which, not surprisingly, has exploded during the pandemic, and it provides a good example of the level of support that franchisees can draw upon compared to independent small business owners.

Compliance levels are increasing across all industries – not just Covid mandates, but health & safety regulations, employment law, immigration, tax … ‘That impacts upon every industry from cleaning to food, from retail to education,’ says Greg. ‘If you run a small business, making sure you’re abiding by all the rules can be very time-consuming and very difficult. A lot of our franchisees are relatively new to the country, and being able to navigate the various ministry websites almost requires a degree – then you have to interpret what they mean!

‘For an independent small business, that can be a job in itself, but franchisees have the advantage of a franchisor who can do a lot of that work and then share precisely what they need to know for their business.

‘Franchises bring together a lot of expertise and franchisee experience to develop systems that work. When we went back into Level 4 in August 2021, we were able to pull out what we’d developed with franchisees the previous year, review what had worked, what changes we needed to make and then tell everyone. That gives clarity and takes away a lot of stress for franchisees so they can focus on their businesses. And, of course, that’s not just true for Covid – it also applies to other areas such as marketing, training, buying, maintenance. Sharing the power of the group is what franchising is all about.’

Grabbing the opportunity

With more people than ever talking about changing jobs or changing locations (see page 16), the ability of franchising to help them do both is becoming more important than ever. Take Jeremy Lowe, for example, who moved from a senior role in the travel industry last year to owning a property maintenance management franchise with his wife Sarah – an early childhood teacher. Despite having no experience in their new industry, they created a million-plus dollar business from scratch, thanks to the training and systems provided by the franchise (see page 47).

‘The building maintenance sector has been trucking along right throughout the pandemic,’ says Dan Vincent, managing director of Oncore. ‘There have been a number of reasons for that – increasing property values, people spending more time at home, less travel – but for us, too, compliance is helping drive the market as the new Healthy Homes standards are kicking in. Franchising gives people like Jeremy and Sarah the ability to transfer their skills into a whole new area and create a hugely successful business of their own.’

Getting better, faster

Training is at the heart of turning new franchisees into successful business owners, and this is another area which has changed dramatically. Two years ago, almost nobody had heard of Zoom or Teams – now everybody uses online video.

‘We use new technology for communication throughout our franchise now, and it’s catapulted us forward,’ says Greg. ‘Our online platform now runs in tandem with face-to-face learning to make training easier, more effective and allow greater understanding.

‘It means new franchisees are more confident and able to do a better job right from the beginning. Because of that, our support team are able to spend more time on helping them grow. Quite simply, new franchisees get better, faster, while the feedback we get from more communication with existing franchisees helps us ensure that everything we do is actually important.’

Key sectors thrive

While commercial cleaning and property maintenance are two obvious sectors which have thrived in recent times, they aren’t the only ones. ‘Supermarkets and some specialist retailers have done very well, particularly those which were able to develop an online offer,’ says Daniel Cloete. ‘A recent report showed 230,000 people shopped online for the first time during lockdown, so it’s becoming more important than ever to have an online presence. That’s something many franchises have already developed on behalf of their franchisees – the latest Franchising New Zealand study suggests almost 80 percent of franchises now do online sales – and it’s another area where combining a franchise’s brand power with local delivery can offer significant advantages.

‘Some food businesses which cracked the click-and-collect, takeaway or delivery models have also performed exceptionally well in the past couple of years. Although others clearly suffered badly, with sustained lockdowns and intransigent landlords creating significant cashflow issues, the sector as a whole will bounce back – remember what happened after the last lockdowns.

‘Consider this: if a franchise model worked well before, it might work even better now. The pandemic has caused franchisors to refine their models, find new opportunities and opened up gaps in the market. Rent ratios have changed, and more desirable sites have become available or affordable. That applies to all sorts of businesses.’

Other trends to look out for

Another area which is expected to grow fast again is education – not just in terms of tertiary education as overseas students are allowed back, but tutoring, sport and fun. With so much schooling having been delivered online, some pupils have fallen behind and many have missed their extracurricular activities. Franchises like sKids, NumberWorks’nWords and Bricks4Kidz can expect to see demand increase, while Seasons Art Class has been missed by its adult students.

And a broader trend to look out for is social responsibility in many forms. The latest Survey of Franchising shows that 65 percent of franchises are already implementing environmental sustainability and ethical measures within their operations, and that number is increasing rapidly. With job seekers already being motivated by the desire to ‘make a difference’, this will become a key factor in business growth and franchise sales in the next few years.

Many franchises already specialise in eco-friendly services, including Cleantastic and other commercial cleaners, Oncore’s insulation services and a range of product specialists from e-bikes to solar energy.

The reduction of packaging and plastic waste is another key area: plastic straws were phased out by most hospitality businesses a couple of years ago and most accepted reusable cups before Covid restrictions, but franchises such as The Source Bulk Foods have waste elimination and quality local produce as a key point of difference.

What hasn’t changed?

The biggest message for anyone considering buying a franchise right now is that, as Daniel said at the start of this article, change creates opportunity – and opportunities, like franchises, come in various different forms. The important thing is not just to spot the possibilities, but to take time to evaluate them properly and to consider both the risks and rewards that they offer (see page 44).

‘Anyone looking to buy a franchise has a lot of options to choose from these days,’ says Greg. ‘Good franchisors have changed, developed and refined their model to make it more desirable, and that’s going to pay off for franchisees in the coming years.

‘My advice to franchise buyers is to shop around to find the right opportunity for you. That means working out what you’re looking for, what you can afford and then talking to a number of franchise brands until you find the right fit.

‘Franchising gives you the chance to get out and do something for yourself. It gives you training, marketing muscle and the support of a team behind you. Above all, it gives you a greater chance of getting real rewards for your efforts. And that’s something that hasn’t changed.’