Franchise Development

Franchise Development Tips, Ideas and Strategies For Entrepreneurs Online & Off

Maybe you haven’t picked up a newspaper or flipped on the TV news recently, so let me repeat it here: the United States is heading into an economic downturn. And if you don’t live in the United States, you’re still affected by this, since the US is such a big player in the global economy.

Historically, times of economic slowdown causes some reorganization in the workforce. For many who aren’t looking forward to continuing employment, starting a business of one’s own is becoming an attractive alternative. A small business is nimbler and more flexible than a large corporation. During the boom times of the economy, an entrepreneur can afford the leisurely process of starting up a new business and nurturing it to gradual prosperity. But during a bust period, the uncertainty of the economic future means that you have less leeway. A shortcut to starting a profitable new business is to pick up another business and run with that.

That’s where the new interest in franchises is coming from. If you are a business owner, a recession is an excellent time to consider selling franchise licenses in your business, which will help your brand name prosper and at the same time cut your expenses which you would otherwise spend expanding. If you are looking for a business opportunity, a recession is also an advantageous time to consider buying a franchise. Instead of working through the steps of building a business from scratch, you can get a ready-made business package and open up within a matter of weeks.

When developing a franchised enterprise, all parties concerned should consider the various factors that will be involved in keeping it going:

Geography - look for areas where your type of business is sparse. Smaller cities and rural locations are good places to consider opening a franchise outlet, since they also see a brief swelling of population during a recession. People who can’t afford that ritzy apartment in the big city will settle for a home in the outskirts, and today’s small town becomes tomorrow’s growing suburb.

Economy - local economy is something you’d better pay attention to. If you work in a “recession-proof” industry, such as food or clothing, you have more flexibility. But for luxury goods, you’re going to have a hard time convincing people who’ve moved from a paycheck to an unemployment check that now’s a good time to buy a hot-tub.

Politics - There are some businesses which run afoul of the local political climate. For instance, a bar franchise is great for Nevada, but a tough sell in Utah. City, county, and state zoning regulations and requirements might block your plans to set up business.

Job market - Hey, you’re going to need to train people to run the place! If all you have to pick from is a lot of rejected laborers who can’t function in an enterprise business, your prospects look grim. Fortunately, during a recession this will be the least of your worries, as people who have been gainfully employed for years get laid off and go looking for new opportunities. Your biggest risk in staffing will actually be making sure that you don’t depend on over-qualified candidates who will flee to a better opportunity as soon as their own job sector picks back up.

Developing a franchise has a kind of fun side: it’s kind of like the business version of the board game “Risk”. Like Risk, you have to plan your strategy carefully to avoid being concentrated too thickly and being spread too thin, and allow some flexibility for the vagaries of luck.