Friday, October 21, 2011

Franchising is Booming. So Should Boomers Get Involved?

Franchising Boom
When the IFX Franchise Supplier Executive Summit opens in Las Vegas this week, it will be differentiated from many other business events across the country this fall by one crucial factor: unlike in many other professions, where the impact of the economic recession is still very acutely felt, the franchise industry is booming. According to the Franchise Business Economic Outlook, there will be 784,802 franchises operating in the U.S. at the end of the year, up from 765,723 at the conclusion of 2010. Franchises are reporting comfortable revenues, and many are remaining open even as surrounding local stores get shuttered.

Industry analysts say that the success of franchises is actually a product of the recession. Just as used car purchases and Prepaid Phone sales go up when the economy constricts, so too does franchising become a more viable ownership model than are other businesses. Consumers like franchises because the products they provide are usually cheap, convenient, and standardized, all qualities of which appeal to cash strapped buyers who put budget considerations ahead of more sophisticated tastes.

From the investor perspective, franchises are a good place to put your money during a downturn because they're a safe bet. For any company that has franchises, the brand name, consistency of product, and previous success across the country are good indicators to investors, wary of the stock market and other ventures, that the investment is not a risky one. With more investment comes more franchises, and with more franchises comes even more opportunities for people to rely on them for cheap and convenient products, thus creating the current cycle of franchising success.

Recently, some commentators have proposed that unemployed baby boomers should look to start their own franchises. After all, many of the unemployed in that age range are both too old and too experienced to find the kind of job that they’d like, but they still do not have sufficient savings for retirement. This is where franchising can come into play. By paying an upfront fee, the unemployed baby boomer can receive training in a company’s business model, assistance in opening a location, and a name brand recognition that will instantly bring in business. For those with executive-level career experience, running your own business – even as a franchisee – may be a more appealing way of saving for, and easing into, retirement.

But franchising is not for everyone. If you’re concerned about your short term income, or if you seek a job that pays benefits and has a retirement account, starting a franchise is probably not the optimal path to take. Be sure to weigh your individual needs carefully. If you do, however, decide to go the franchise route, congratulations – and welcome to a rare industry that is booming.

No comments:

Post a Comment