Note: This article was authored by two interns in our market research department as an opportunity for them to highlight some of their findings; Ben Greeley and Shane Oommen
The recent Covid-19 pandemic was disastrous to small businesses, causing 43% of businesses to temporarily close, and employment to fall by 40%. Many of these firms had little cash on hand prior to the pandemic and were forced to dramatically cut expenses, take on debt, or declare bankruptcy. Among these firms were franchises, which by and large have not needed to cease operations during the pandemic. In fact, many saw increased business. Among the owners of these firms, and thus impacted by the pandemic, are women. In light of Women’s Month as well as the pandemic’s impact, it is worth examining how the pandemic has affected female entrepreneurs.
The numbers speak for themselves.
Women own or co-own about 265,000 franchises, or 35 % of all U.S. franchise outlets, up 24% from a decade ago. Based upon a report from Franchise Business Review, child services are the leading franchise sector for women franchise owners where 51% of franchises are women. Travel and hospitality has an even split between male and female owners, and retail (43%), fitness (39%), and sports and recreation (36%) round out the five sectors with the highest percentages of female ownership. A popular sector among women franchisees and franchisors is home services. Women franchise owners outnumber men in several industries, including decorating services (86% women-owned), modeling schools and beauty pageants (68%), clothing, toys and accessories (63%) and travel agencies (61%). The upfront capital required to start a franchise varies, though over half of women surveyed spent less than $50,000, 17% spent between $50,000 and $100,000, and nine percent spent up to $175,000. 22% spent between $175,000 and over $1 million, and only two percent spent as much as $1 million+.
Impressively, 30% of female respondents have owned their business for 10 years or more. 17% just launched last year, 20% two to three years, and 13% four to five years. In total, businesses that have been open for five years or less account for exactly 50% of female owned franchises (as per respondents). 15% of these women-owned businesses have been open six to nine years.
In a Franchise Business Review survey of 8,800 women who own franchises, 87% said they enjoy operating their business, while 75% said they would recommend their franchise brand to others. Women that enter franchising often are leaving corporate roles.
Stacy Griner, a franchisee in Georgia, is the quintessential example. Coming from a background in big law, she retired early, and seeing an ad for Kika’s Stretch Studios, decided to open a franchise in the heart of Atlanta. Kika’s Stretch Studios offer stretching therapy in small class sessions. She opened in 2019, and almost as soon was closing it up again for the pandemic. Fortunately, Georgia reopened early, and quickly Stacy was building strong client relationships that maintained fidelity through the waves of Covid-19 fears. As a female minority business owner, she saw firsthand the discriminatory lending that stifled entrepreneurship at the start, and the uneven distribution of PPP loans that failed to save it during the pandemic. She felt fortunate to have acquired capital and savvy in her corporate career, but warns that lenders do not care about any background but successful business management – which as a new business owner, she originally lacked. Reflecting on similar businesses, she doesn’t see corporate chain gyms downsizing going forward, “people will be vaccinated, and business will continue as usual.” Asked about crowdfunding, she thinks it’s good to have new avenues, but “nothing will change as long as small business lenders frequently tell women and minority entrepreneurs ‘No’.” On whether she’d recommend franchising to other women, she would, warns that the challenges are numerous, but happy clients make up for it.
At FundingFuel, we hope to ameliorate those challenges, and help franchisees focus on making clients happy. In light of Women’s Month, we hope to help women entrepreneurs support local communities and economies, by the community, for the community.
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