Franchising still offers viable opportunities for investors
Last week we took a brief glimpse at Wall Street and some of the good, and bad, news filling the media. Franchising, currently suffering like many other sectors, has historically outperformed other industries during economic downturns and subsequent recoveries. A few interesting points:
- While dozens of retailers and corporate owned chains are expected to fail, franchises are expected to survive
- Recessions and higher unemployment rates have historically provided a push to franchising
- Post downturn, major growth is expected and well prepared franchise systems are likely to grow dramatically
So what does this mean? The strong survive and the very strong could potentially see dramatic growth and increased market share. The weak? Well, you get the picture.
As you consider investing, spend some time with with the Franchise Disclosure Document (FDD), particularly the sections with the financial, training and support information. And be sure you call, email and visit other franchisees for the system you are considering an investment as well as the competition. Ask them how much money they are making. Ask about the support. Also be sure you consider how much you are willing to risk to get into business for yourself. Some franchises, like Spring Green Lawn Care Franchise, will even require both you and your spouse are on board, ready and willing to join the team.
February 10th, 2009 at 4:59 pm
Everyone will have to tighten their belt and brace for the economic impact; over 50% of retail sales are done by franchise stores in any State. Therefore, if an Anchor tenant or other large franchise tenant is impacted, so will the perifery businesses be affected. The infection will certainly be passed on to others, but franchise systems will fare better than an independent by the fact that they have each other to talk to and come up with innovative cost cutting solutions and marketing ideas.
This is a great time to get into a franchise resale as long as you do your killer due diligence and review the numbers for all scenarios, including a further drop in sales for 2 years. Most franchise owners are struggling depending on the financial cushion they have, except for Subway owners who had a record year in 2008.
mrfranchiseman
February 23rd, 2009 at 3:28 pm
In the past 12 months, I have seen more and more inquiries from people laid off or considering investing in a franchise because they do not want to be in an uncertain situation in the future. Franchise resales are a good situation to look at because of existing cash flow. Most of the questions are about Subway as they have all heard it is a good franchise to be in and know successful franchises.
I agree it is worth looking at…..
mrfranchiseman.com
March 19th, 2009 at 12:48 pm
Hi,
I come across your website and I’m interested on “franchise” you have posted. Thanks for the information you shared and I learned more from it. Ill come back often.
Thanks,
Dux Franchise