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Franchise Articles

by Terrie Hall Abrams

If you believe the national headlines, you would think that all is doom and gloom in the business world. Wall Street Plunges on Recession Fears. Chrysler to Cut 25% of Salaried Workers. Job losses: Worst in five years.

In fact, the current economic situation has many people shaking in their shoes and wondering if they should wait to start a new business. While it may take a bit longer to secure financing in today, a bad economy can offer some real deals to someone looking at business ownership. The key is to know how to take advantage of the situation and turn the lemons into lemonade.

Here are 5 reasons to buy a franchise TODAY:
1. Interest rates are low. A weak dollar usually means lower interest rates. Although money can be tighter than your belt on Thankgiving for shaky borrowers, those people with good credit are getting some excellent interest rates as the government reduces the prime in an effort to beef up the economy. If you are ready to become a business owner, do not wait for rates to rise. A low interest rate will mean more money in your pocket.

2. Banks consider a franchise purchase a safer investment. While start-up businesses are deemed risky, some financial institutions are well aware that franchising has a good record of success. Therefore, even in a weak economy banks are willing to provide loans for franchise purchases. Some of the reasons that buying a franchise is considered a safer investment than a start-up include:
  • A well-tested business model
  • Thorough initial training
  • Mandatory marketing program, ensuring adequate advertising
  • Continuing franchisee support
  • Brand recognition

3. Property values are down. Need space for your franchise business? Prices for leasing or purchasing a business location can fluctuate along with the economy. Right now it is a buyers market but as the demand for space increases so will the cost. If you find a good price in a good location, act quickly. Just remember to have someone well versed in property check out the terms of your purchase or rental agreement to be sure you are getting the best deal possible.

4. Plenty of employees available. Layoffs happen so often that it hardly registers when GM, Ford or Chrysler announces it will be slicing off a chunk of its workforce. Microsoft, Yahoo and Apple get the big headlines but companies of all sizes and types turn to reducing their workers when the economy slows. However, what’s bad for one group of people can be a benefit for another. Almost every business needs employees and chances are you’ll find more highly qualified workers to choose from during an ailing economy than a healthy one.

5. Buying a business can help you land on your feet. If you are one of those laid off, what better way to recover from that personal hit than to start your own business? Just how many times can you be let go or passed over for promotion? There are more top performers out in corporate America than there are positions to reward them. When you’ve had enough of that roller coaster called corporate America, consider franchising as a work-around that will really work for you.

If you truly want to be your own boss, steer your own course and take control of your career, this is an excellent time to buy a business, particularly if you invest in a solid franchise with great training and support.

Tips for Buying a Franchise:

  • Pick a recession resistant business.
  • Look for one with a low start-up cost.
  • If your credit is not great, clean it up now. You will need good credit to qualify.
  • Do not discount service businesses because they aren’t sexy. They are among the best values among franchises because of their lower entry cost, high demand and good margins.
  • Stay within your budget. One of the main reasons for failure of a franchise is being under-capitalized.
  • Search for an established franchise with numerous franchisees, which will give the bank plenty of data to ascertain the overall potential of the business.
  • Read the Franchise Disclosure Document and other documents carefully.
  • Your best source of information about a franchise opportunity is the existing franchisees. Use this resource wisely and you will get a good sense of the overall business.
  • Choose carefully. Unlike a job, which you can change at will, you’ll need to stick with your franchise purchase to fully appreciate the return on your investment.


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