Franchising Viewed through the Prism of a Recession
In the face of a recession has come a renewed interest and focus on franchising and franchise opportunities. Faced with the uncertainty of "corporate life" and layoffs rendering hard working and educated individuals without employment, a spotlight has been placed on franchise ownership and the resources available to prospective franchisees.
So what do We Learn From Viewing Franchising through the Prism of a Recession?
- No Business is Recession Proof - Including a Franchise: In her timely and informative article "When Career Turns Down, Franchising is Option" career columnist Eve Tahmincioglu correctly recognizes that purchasing a franchise is definitely an option that "out-of-work individuals with money" should consider. However, Ms. Tahmincioglu cites to Small Business Administration statistics and cautions would be franchisees that a franchise business (like any business) is not recession proof. So what does this mean? Nothing is guaranteed and do lots of research - explained in the next point below.
- Selecting the Right Franchise Requires Research: In an earlier post I urge (strongly) that before you purchase a franchise contact existing franchisees and ask them about their experiences. This point is critical, however, in terms of the "information gathering process", the internet has helped franchise purchasers level the playing field. In his article "Blogs Provide Insight to Would Be Franchisees" Wall Street Journal columnist Richard Gibson provides prospective franchisees with critical advice and, most significantly, an analysis of Blogs that offer business purchasers with great information and advice . So if you are considering the purchase of a business or franchise read Richard Gibson's article and check out the blogs, which include:
Blue Maumau, Franchise Pundit, Franchise Chat, Rush on Business, Unhappy Franchisee. Other great franchise blogs include: The Franchise King, Franchise Pick, Franchise Essentials.
- If You are Buying a Franchise "Only" because You Lost Your Job - Don't Do It: With the many rewards that come with entrepreneurship and owning your own business or franchise come many difficult questions, obligations and choices. While your current employment status (or lack thereof) may be "one of many" valid reasons to buy a franchise it should not be the only reason - otherwise, you may make a bad situation worse. In my article "Can (or even Should) you Buy a Business or Franchise to Replace a Lost Job?" I have attempted to address this issue and identify some of the additional factors that should be considered.
Although the "current" economic climate is difficult, there are, nevertheless, many opportunities for those looking to make a leap into the world of entrepreneurship. However, before doing this, take advantage of the valuable information offered on the web by the franchise and business community.
Interesting article, I think with the present crisis franchising is the best option and can be a great way to make a living, check out this site http://www.franchisefordads.com great website with the latest Franchise Opportunities and Ideas.
It isn't a surprise to government that franchising grows in recessions when those who are layed off or have been early retired or discharged from the Armed Forces are looking for jobs and there are no jobs available. Franchising is hyped and advertised as a "proven" venture with little risk and the real risk is hidden because of the red herring of government disclosure that is wrapped around an onerous, unilateral contract that appears to be a "take-it- or -leave- it" proposition to the new buyer.
Even the SBA Advocacy Committee advises that franchiSEES are NOT ENTREPRENEURS and merely investors in the business chain of the franchisor who are the resources for the franchisors to grow their chain systems.
It seems obvious that franchising was disingenuously regulated by the federal government with the promulgation of the FTC Rule in the late 70's because franchising does grow in recessions and helps to stimulate the economy.
Let the Buyer Beware of franchisors and brokers who CAN survive in recessions even as a great many of their franchisees go down the drain if they can always sell new franchises out the front door and abet the sale of highly discounted franchises through fire sales out the back door of the systems.