It cannot be denied that the word "recession" strikes fear into many people. The word implies hardship, job loss, and therefore, loss of income. In this scenario, an aspiring entrepreneur who plans to get a franchise or expand existing business venture will have second thoughts, which is a a natural reaction because the economy is shaky (at best).
However, there are multiple reasons why opening a franchise business in this prevailing situation is actually a safe bet. One of the major ones is that franchising is not a one-stop venture for those who want to tap other sources of income. It is a long-term investment that could benefit even after the recession period is over. Recession offers franchisee a chance to purchase any offer for a new outlet or for expansion at a lower price tag and develop a niche in the market during that lull period. Once the customers are familiar with the product or service, marketing is just one step easier.
It is, thus, not surprising to see that amid the endless stories of corporate downsizing and business bankruptcies, many franchised businesses are thriving and growing. Everyone can easily observe that franchising continues to ride out the economic turmoil that has caused many less-resilient types of businesses to fail. Traditionally, franchising's success over the past 30 years has been tied to its ability to identify and respond to rapid consumer and market changes, no matter how subtle or small.
"Franchising is one bright spot in a lagging economy," says Gregg Reynolds, chairman of the International Franchise Association, in Washington D.C. "Last year, more than 18,500 new businesses were created, adding approximately 108,000 new jobs to the economy."
Joseph Simone, executive vice president of Mamma Ilardo's, an Italian-pizza franchise based in Baltimore, says that it will be entrepreneurs--franchisors in particular--who will drive what he calls "a renaissance in capitalism" in the United States.
"If there is a recession-proof mechanism within this economy," it is entrepreneurship, says Simone, because entrepreneurs "embrace the philosophy of customer service, high quality, and fair price."
Many experts observed that franchise companies that succeed during recession are those that are narrowly focused, deliver the product or service to the home, and offer an inexpensive luxury to the consumer or provide services at attractive prices.
Another healthy sign that franchising is running counter to the grain of the recession shows up in the results of a study on franchising conducted by the Gallup Organization, Inc., based in Princeton, N.J. In the study, 94 percent of the 994 franchise owners polled said they consider their franchise operations to be either very successful (47 percent) or somewhat successful (47 percent).
The bottom line is this: Comparative comfort and stability are two major benefits of the franchise system to both the entrepreneur and to the economy as a whole. This is the reason why all over the United States, small business owners are taking franchise opportunities and starting branches successfully. In areas like Cincinnati, OH or St. Louis, MO, the market is ripe for franchise businesses, and for sharp, hard-working people to run them. Despite the recession, a company that provides a good or service with an established quality is bound to succeed.
A word of caution though, Growing the business too fast may result to losing focus, while growing slowly may result to losing the customer's interest.
However, there are multiple reasons why opening a franchise business in this prevailing situation is actually a safe bet. One of the major ones is that franchising is not a one-stop venture for those who want to tap other sources of income. It is a long-term investment that could benefit even after the recession period is over. Recession offers franchisee a chance to purchase any offer for a new outlet or for expansion at a lower price tag and develop a niche in the market during that lull period. Once the customers are familiar with the product or service, marketing is just one step easier.
It is, thus, not surprising to see that amid the endless stories of corporate downsizing and business bankruptcies, many franchised businesses are thriving and growing. Everyone can easily observe that franchising continues to ride out the economic turmoil that has caused many less-resilient types of businesses to fail. Traditionally, franchising's success over the past 30 years has been tied to its ability to identify and respond to rapid consumer and market changes, no matter how subtle or small.
"Franchising is one bright spot in a lagging economy," says Gregg Reynolds, chairman of the International Franchise Association, in Washington D.C. "Last year, more than 18,500 new businesses were created, adding approximately 108,000 new jobs to the economy."
Joseph Simone, executive vice president of Mamma Ilardo's, an Italian-pizza franchise based in Baltimore, says that it will be entrepreneurs--franchisors in particular--who will drive what he calls "a renaissance in capitalism" in the United States.
"If there is a recession-proof mechanism within this economy," it is entrepreneurship, says Simone, because entrepreneurs "embrace the philosophy of customer service, high quality, and fair price."
Many experts observed that franchise companies that succeed during recession are those that are narrowly focused, deliver the product or service to the home, and offer an inexpensive luxury to the consumer or provide services at attractive prices.
Another healthy sign that franchising is running counter to the grain of the recession shows up in the results of a study on franchising conducted by the Gallup Organization, Inc., based in Princeton, N.J. In the study, 94 percent of the 994 franchise owners polled said they consider their franchise operations to be either very successful (47 percent) or somewhat successful (47 percent).
The bottom line is this: Comparative comfort and stability are two major benefits of the franchise system to both the entrepreneur and to the economy as a whole. This is the reason why all over the United States, small business owners are taking franchise opportunities and starting branches successfully. In areas like Cincinnati, OH or St. Louis, MO, the market is ripe for franchise businesses, and for sharp, hard-working people to run them. Despite the recession, a company that provides a good or service with an established quality is bound to succeed.
A word of caution though, Growing the business too fast may result to losing focus, while growing slowly may result to losing the customer's interest.
This article is spoken from the point of view of the franchisor, and its unrealistic pollyanna attitude does a disservice to potential franchisees. To say that opening a franchise in this environment is "a safe bet" is completely irresponsible. The reality of being a franchisee is far more difficult and fraught with risk than this article, and most of the other pablum written by franchisor shills, is willing to acknowledge.
ReplyDeleteMark Leonard, www.YourFranchiseMentor.com