DON’T WAIT UNTIL COVID-19 ENDS...
Timing and action are the keys to a Successful Franchise Investment in a COVID-19 world

DON’T WAIT UNTIL COVID-19 ENDS...

I connected recently with a friend of mine leading an investment/equity group in Beijing with offices in Singapore, Hong Kong, Dubai, Riyadh, and in several other global cities.

His firm’s specialty is investing in franchisor and multi-unit franchisee businesses – a passion of mine!

I asked him how his investment ‘traffic’ had been over the past few months of COVID-19 considering most of these SMEs and businesses across all regions had been subjected to some form of repeated lockdowns, quarantines, ‘circuit breakers’, you name it.

Surprisingly, or perhaps not, he confidently remarked – “Pandemic, what pandemic. Business as usual for us!”.

I was pleased to hear his answer, as it confirmed my own thinking, so I further explored his profiling practices (another passion of mine!) towards attracting investors particularly within the fitness, health, exercise, and wellness space. And there are many such niche investors seriously interested in innovative boutique brands beyond the standard 'big box' gyms.

He explained that whilst some very traditional investors and equity groups (with "conservative money") had invariably held off until COVID-19 eases a bit and until a clearer light at the end of the tunnel emerges, he focuses on working with already-enlightened fitness franchisors and bold investors who see this once-in-a-generation glass-half-full (optimistic) opportunity.

Furthermore, many forward-thinking investors position this underpenetrated industry across Asia as sitting in the pad or cradle of a slingshot. It may be somewhat static or idle now, but savvy franchisors predict a dramatic trajectory forward for boutique fitness brands in large part because of COVID-19 which would probably not have happened but for COVID-19.

Many brands would have just continued waddling around at some fair pace in normal times had COVID-19 not happened and elite investors would have simply overlooked this important fitness franchise industry in favor of higher-profile investment categories.

Going forward, as COVID-19 eases off and solutions (such as vaccinations) come into play, the very restrictive nature of lockdowns will soon release the energy that has been tampered down and the franchise opportunities will present themselves more and more.

Members and investors alike want to get active again, get fit again, and get back to some form of normal again, and exercise centers will be at the forefront of that human experience enhancing their physical, mental, social and spiritual health recovery. There is also a unique financial opportunity in a fast-restart recovery scenario, and timing is critical.

Unfortunately, many franchisors and operators – still struggling in large part due to weak or no strategies at all, or misaligned planning, or managing demotivated and exhausted (even remote) staff, or not playing the long game, or taking a doomsday approach, or in some cases, just ego or procrastination getting in their way – still seem to stay passively on the sidelines hopelessly waiting, and fearfully watching their businesses gradually erode away. And for some, never to survive. For others, never to thrive again.

"If you fail to plan, accept that you are also planning to fail".

Many also, sadly, were under exceptional pressure as they were new or smaller entrepreneurs, though passionate, but were under-resourced, understaffed, inexperienced, overwhelmed with panic, who lacked clarity of purpose and direction, and hadn’t built a flexible platform for growth much less sustainability. There was no built-in escape hatch or safety net. They experienced a form of historic and impactful 'blunt force trauma' to their franchise dream. But a strong recovery is still possible if the right professional advice is accepted and the appropriate actions are taken.

"If you are not moving forward, you are moving backward."

On the other hand, the mindset of progressive fearless dynamic franchisors was that they still relentlessly sought out new franchisees for their brands, they still engaged strong investor-partners, recruited quality executive & leadership talent who fine-tuned their modeling, structures, and processes, they solicited vendors and created direct supply chains, negotiated flexible terms, and they developed more robust data analytics and connectivity capabilities, created apps, expanded their networks and alliances, supported and reassured their franchisees, pounced on once-unavailable locations, and negotiated great lease terms. Most importantly, they uplifted their long game performance platform.

The trigger for experienced franchisors and investors was that the proverbial “pivot” (a familiar if not overused term now) was NOT simply to turn, rotate, or look (and panic) towards a sheltered new direction. They didn't revert to a “bunker mentality”.

Instead, they forged ahead and accelerated to a higher dimension. They kicked themselves in the butt backed with the perseverance to succeed regardless of the historic challenges of the time. They understand the mantra - "I can grind it out with the best of them".

They took the opportunity to refocus, redefine clearer goals, breathe new life into their business, reenergize their resources, and looked towards new targets, new markets, stretch goals, and S.M.A.R.T. platforms. They elevated their game to a new high. They produced an adrenaline towards fight rather than flight. They will emerge out of COVID-19 with a firmer and broader position-of-strength than in March 2020 and with greater market share.

They maintain a steady path forward and have known success following their own experiences in previous recession or post-recession years. They have witnessed firsthand the ebbs and flows of economic turmoil and have all steered their franchises to safe passage.

There is a reset in many industries, particularly in franchising – those who stall, twiddle, and fall behind vs. those who are bold, who are courageous, who are daring, who persist, prepare and drive forward with clarity, commitment, innovation, and passion for achievement.

As I often preach - "The psychology of franchising is as important as the mechanics of franchising."

In the weeks and months ahead, there will be a rush to the front pack – much like at the start of a marathon.

The smart franchisors will have already secured fresh new investment capital, staffed their leadership team, charted their franchise-selling processes, fine-tuned their governance programs, and will have "earned position" at the front of the line. They will have strengthened their internal mechanics and will be energized and psyched up for success.

The franchise brands with weak or incomplete management systems which investors can easily detect will scramble for slim pickings and won't be given much priority.

In effect, this post-COVID franchising reset also carries an inherent culling of the herd when weaker brands, whether small or large, will falter and likely exit, or get swallowed up, or ignored altogether.

Smaller robust focused well-resourced boutique fitness brands armed with clarity and creativity will have the mobility (and investor attraction!) to expand and drive growth efficiencies at a faster rate than the larger sluggish, stagnant, or retreating brands.

How will you be positioned?

Thank you.

Feel free to read my previous article - "FITNESS FRANCHISE GROWTH in Asia and the Middle East is all about NUMBERS" - click: https://lnkd.in/gDAuhPd

Blair Russell Campbell

CCO at BEYOND ACTIV | blair@beyondactiv.com |+62 821 452 73519 Co-Creator Health, Fitness, Wellness+ Sports Festivals | Analyst🧘♂️

3y

Rod Hill- think you will find this article interesting.

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