You may know that the opportunity this column provides me to crystal ball gaze is perhaps my greatest little indulgence, and I do my best to keep it to once a year. However, a year is a long time in the current ever-changing world, so I can’t help but want to go back to one of the predictions I made earlier this year and see how it is playing out – the great resignation.
During the first lock-down I commented that many people, having spent months working from home, would not want to return to the restrictions and prescriptions of “working for the man”.
At the time I was quietly assured we were about to see a seismic shift of how people wanted to work and that this would flow onto growth of franchisee entrepreneurship.
The premise was that people were going to leave their jobs in droves, and some of these would seek a franchised business.
At the start of 2022 I revised my view, suggesting that we were yet to really see that in New Zealand the initial wave, which was just a hint at the start of the very first lock-down, had all but ebbed.
In the US the recent experience is that the great resignation has added fuel to franchise growth. 2021 saw an estimated growth in franchise business units of 3% – which is not a small number when considering a base of around 750,000 units.
However, US growth has not been consistent across sectors, with some categories experiencing experiential growth, some doubling or tripling their size, while others have contracted. This indicates to me that perhaps the primary driver was not the great resignation but other economic or market changes presenting opportunities for growth.
Increasingly, I don’t think the great resignation is happening in New Zealand, and I am firmly of the view that it certainly is not filling the pool of potential franchisee entrepreneurs – a view shared by Simon Lord of Franchise New Zealand Media www.franchise.co.nz.
The veteran commentator shared some insights from their digital and print presence and suggested that while last year had been a bumper year for interest – fueled by lockdowns – ongoing uncertainty meant that actual enquiries were very industry dependent. While interest is still high, that trend is continuing.
So why are we not seeing the great resignation, and its perceived flow-on to franchisee entrepreneurship?
Changes in employment and the balance of power
In my mind perhaps the greatest single contributor to the great resignation, and apparent pain point, the “turning up to work” component, has been addressed. New Zealand work culture has dramatically changed post-Covid. There is barely an industry that has not been forced to respond to flexible work arrangements.
Increasingly, people can work where and, in many cases, when they want, providing them the golden double of work life balance with the security of employment.
Funding is a challenge
Simon revealed that enquiry in the lower investment levels – sub $200,000 – is strongly up but, above that level, at best flat or down, especially in hospitality.
Our experience is similar, but critical to note, the higher investment level enquiry is coming from potential franchisee entrepreneurs that have liquid capital at their disposal and are not reliant on funding. Whether actual or perceived, we’re hearing the message: it is very difficult to borrow or fund a business purchase.
Low levels of unemployment and wage growth
Historic low levels of unemployment and an unsurprising recent report of wage growth of 8% mean people are remaining in their current roles or moving for more pay. They do not however appear to be leaving the job market to start a franchised business, for now at least.
The future remains bright
My last point for now is an important one: While we are not seeing the great resignation at the moment, current economic and social environments have created time and opportunity for people to research and evaluate their options, including becoming a franchisee entrepreneur.
I think we may be returning to review this in the future.