Could This Be A Great Time To Invest In A Franchise?

Joel Libava
Thu, 09 Oct 2008 22:20:00 +0000

The world is still turning, the sun is still rising and setting, and money is changing hands...

You may find this hard to believe, but there is still business being done everyday, in the US. Franchise owners, independent business owners, and yes, even big corporations like Microsoft, and IBM are still selling their wares.....Keep reading. One of the world's top franchise expert's answers some tough questions...

Consumers are still out there buying appliances, big screen

televisions, and even a few automobiles. Small business owners are

still purchasing computers, servers, and printing products. Some transactions are taking place right down the street from you, while others are taking place, online.

Businesses are still being bought and sold, and some people are looking at franchise opportunities. There are even some motivated entrepreneurs who are converting their concepts into franchises.

What does this all mean? It means that the sun still comes up every day. Every day.

The stock market may win some days, and may lose some days. Businesses

may open some days, and businesses may be forced to close some days.

I asked a couple of really important questions of my colleague, Michael Seid, The President of MSA And Associates. Michael is considered one of the top franchise experts in the world. Look at what he has to say about franchising, and our current economic troubles:

Q: What would you suggest to anyone that is

torn between waiting for the economy to stabilize before they start

looking at opportunities in franchising?

Michael: "While the economic difficulties are

serious, for potential franchisees this opens up major advantages.

Franchisors anticipate that their flow of quality candidates will slow

as will the availability of capital and loans for some prospective

franchisees. I would certainly take a heightened look at the financial

condition of any franchisor today (a good idea even in the best of

times). But established brands with good track records are still solid

opportunities to look at. Well funded new concepts may actually have

an advantage as they can more readily deal with market changes and

opportunities at the consumer level which larger brands cannot. Money

is made in a down economy by those who are smart enough to do their

homework and understand the possibilities. Looking at existing

franchises to purchase in addition to expanding from that base with

solid franchisors is something to consider now."

Q: Are there any types of franchise categories that may do better than others during tough economic times?

Michael: You don’t invest in franchises simply to

avoid current economic problems. Franchise investment is a long term

investment and you should look to how brands have done in up markets

and down markets. No industry is recession proof but some are

recession resistant. I always look at what people must buy when times

are tough. Alternatives to high prices vacations or entertainment for

families and education for children should do fine. Second jobs will

require day care for children and seniors that have been assisted by

the family. I would look at the solid brands in those areas. Hair

care is essential especially if you are looking for a new job or a

second job. Those have always been recession resistant industries.

Great insights. Thank you so much, Michael....

It has always been like this. Sometimes credit has been hard to get, and sometimes, believe it or not, credit has been too easy to get.

So, what should you do?

If you are prospective new franchise/small business owners like the

dynamic couple that met with me earlier this week, you start doing your

research on opportunities that are a nice fit for what you want in a

business. You gather the facts, talk to other franchise owners of the

opportunities you are interested in, and you take a step back, and

decide whether or not to move forward, or not. It is no different now

than it has been for the last 8 years that I have been in this segment

of franchising. Except for one little thing. The financing picture.

But....

I have a solution! There are actually some

interesting alternatives that are available. As a matter of fact, in my

role as a franchise consultant, I have been able to help some of my

franchise candidates get into businesses of their own using these

options, way before the banks decided to not be your friends.

If you are serious about becoming a small business/franchise owner,

this could be a great time to prove to yourself and others, that nothing is going to stop you from gaining some freedom and control back in your life. Because if you can find an opportunity now, and do the due diligence

required to make a safe and fact based decision, and get the financing

needed, you may well prove to be an unstoppable small business owner,

who can grow your business into something substantial, and gain some

real equity. Of course you always have another choice.

Read this story of someone who took the risk, is a franchise owner, and is quite busy!

{This article is from Joel Libava's The Franchise King Blog. Joel is the President of Franchise Selection Specialists Inc. a Clevland, Ohio franchise consulting firm.}