Franchising: A Great Option During A Down Economy

Posted on June 03, 2011 by Bryan Nisperos

During a recession there is no shortage of those willing and able to work which has sparked a renewed interest in franchising as a career option. Aside from the opportunity to essentially hire yourself, franchising offers many great selling points like having the security of working under a proven brand and business system in addition to having all of the training and support you need to get started. Another factor that propels franchising is recently laid off c-level executives looking to start the next chapter in their life. Since franchising is usually a much safer bet than your own concept and you can typically get funding easier this can seem like a logical transition. Whatever your attraction to the franchise lifestyle, there are a few things to consider.

Why start a business in a recession? You'll have fewer competitors for one. But the main reason is it's a great time to grow a business. While existing businesses are terrified of lower sales and large staff, you're just getting started. They are hedging their bets and lying low, you can be innovative and lean. And learn everything you need to know to position yourself for the recovery. There's always a recovery, and you'll be there, ready.

While franchising is a "safer" choice, like any business venture, there's still money involved. Many franchisors require a franchise fee, a one-time charge paid up front, which can range from as little as a few thousand dollars to tens of thousands of dollars depending on the particular franchise. In addition, franchisees are often required to pay royalties based on the percentage of annual sales. Currently you can use your 401k or IRA to fund your new franchise with no tax penalties and there are hundreds of SBA approved franchises which can make getting a loan faster.

No matter the economy, choosing the right franchise can make the difference between success and failure. There are currently more than 3,000 companies offering franchised businesses in more than 70 industries, meaning there is honestly something for everyone. But when researching, remember it's not just about what you like or enjoy. You also need to make sure you have the skill set to run the business. If you love burying your head in numbers and think a tax franchise might be perfect for you... you might be surprised to know what you really need is to love networking and managing.