Financial Crisis Brings New Opportunities For Some

While some investors have every reason to believe that the sky is falling, others believe that the sky is the limit. Prospective and current franchisors may find new …

While some investors have every reason to believe that the sky is falling, others believe that the sky is the limit. Prospective and current franchisors may find new opportunities in an uncertain economic climate. Read more on this topic in this article from Blue MauMau.

Nobody seems to know what this economic mess really entails or when it will settle down. Is the sky falling? Probably for some, but not for most. And it certainly won’t fall indefinitely into the future. So how do franchisors and prospective franchisees make the most out of the current economic situation?

There are always opportunities to be had for those who don’t overreact to the day-to-day roller coaster of financial events.

According to Phil Kuban, Principal/Owner of FranNet, “Over the last few weeks we’ve seen this economic situation cause fear and individuals feeling a total lack of control with respect to their finances. This has more people looking to control their future themselves, and investing in a high quality franchise”.

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It is well known that quality products and services always stand the test of time. This is, in fact, more true than ever during challenging economic times such as we see today. First and foremost, make your case in forceful, factual terms. You will surely want to sell the “sizzle,” but be certain you have the facts to back them up. During this period you will find out-of-work individuals with accessible cash and credit who have the business acumen and experience that every major franchisor is looking for. They will not, however, be impressed with a slick advertising pitch  and sales hype.  As Blair M. Gran, CEO of Speedpro Imaging stated recently, “we have sold five franchises in the last two weeks. The difference maker for us has been our ultra-focus on quality.”

 It is inherently true that some industries are more recession resistant than others, and you must take this fact into consideration when reviewing opportunities in different franchise categories. A good example of this would be Auntie Anne’s, Inc. whose Director of Franchise Development and International Operations Mike McCoy has stated that “in the past several weeks we have not experienced any perceptible change. We are still receiving boatloads of calls from prospective franchisees. People recognize us as a high quality brand that you can count on, further we offer comfort food which has faired very well even in difficult economic environments”.

Prospective Franchisees:

First off, narrow the field of potential franchises you are considering by identifying a list of great investment options, and then select the franchise opportunity best suited to your particular interests and business situation. Why consider any franchise that isn’t among the Best of the Best? You should definitely do a considerable amount of due diligence, including consulting an attorney, prior to making any final decision. A short list of these considerations would include an evaluation of

  1. Top quality senior management with experience in the franchising, and, more specifically, experience in the type of business you are considering.
  2. Only invest in proven concepts that will stand the test of time, i.e. no ‘fads.’
  3. Is there a unique and proprietary operating system associated with the business? Is there real value in the system you are investing in?
  4. Franchisee satisfaction is a must. Are a vast majority of existing franchisees enthusiastic about their investment? Would they do it again knowing what they know now?
  5. Does the business model provide a reasonable return on your investment, allow you to pay yourself, pay royalties, and retire debt?
  6. Be certain you have the support of the individuals closest to you. You will need the support of those friends and family if/when the times get tough.

In these particularly distressful times individuals are investing in franchise opportunities as a means of taking control of their financial future and to change their personal lifestyle. Yet now is the time to be cautious. Consider only those franchises most recession-resistant, and double check your due diligence research. But in the end, if you find the right deal that meets your established criteria, there may never be a better time!

This article has been reposted from Blue MauMau. View the article on Blue MauMau’s small business and franchise news website here.


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