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Franchises in this New Economy


Still unofficial results over the past 14 months showed that approximately 200 to 400 franchise systems were able to fight and resist the large swings in the economy last. Many have lost growth, while others directly failed. But when we compare the numbers of businesses than those franchises that closed their doors, we're surprised to see that the business models of the franchise business had a greater resilience to any other business. A good franchise system sosporta general pressures that are on any small business. This is usually ends up providing for the franchisor makes every effort to ensure that all subsidiaries to do well and thereby achieve a better positioning of the brand. Beyond that, statistically, the franchise business has been good in times of crisis, that does not mean having no major impact of debt problems that exist today. Those franchises that failed probably could not handle the challenges that brought the economy. The reasons may have been many, either from mistakes in the choice of models, staffing problems, vision problems, loss of financial income or simply a combination of several factors. If you are interested in acquiring a franchise, here I leave a number of aspects that have to take into account to see which strategy is better suited to the type of franchise and the type of economy.

1) Are we sure that the consumer of today and tomorrow will continue to buy what we sell? Always ready each year on the most important concepts related to the franchise, but until we get into the charm of a business with great potential we have to decipher whether that power is growing by 1, 2 or 10. We must ensure that our concept includes the value that both the customer wants, at least for the duration of the franchise contract. Technological advances must be investigated to avoid falling into the obsolescence of the product or service. If you're looking for a new concept, we can evaluate "copycats" that can potentially move to other firms in the market regarding price and market capitalization.

2) What business leaders really have the resources to survive in a time of new challenges and take important steps towards better times? There were many business leaders who anticipated the recession last year. It is important to understand if our franchise system has a plan to maintain sales in the event of a recession. In the event that no new one is important reassess the processes, programs, products and services that were put into the start with the vision of the company to avoid the consequences of an economic downturn. It is also essential to consider the strategies of the company to take advantage of the economic crisis. If a system is self-sustaining through revenues from franchise fees, we might assume that surely will have difficulty staying in his course on the operation of its competitors. This does not mean that investing in a franchise from a new system that may not have succeeded in obtaining copyrights or sales system is a bad Desición. Still, the tight credit market stress and delayed openings of any franchise that probably do not have a financial cushion to have a great support in their personal and their programs.

3) How the Franchises feel about the response with respect to the Franchisors Recessions? In the endless search on an attractive franchise opportunity, make a note on accessibility with senior leaders. In addition we must also ask those who buy the franchise if he ever saw the staff of the corporation in their markets. Whether executives attend meetings and hold conferences where they brought value and showed their ability to take strong Desiciones with a long-term strategy. Any idea if there is open communication to share ideas with the aim to locate and repair problems when terms, there turbulence.

Those who buy the franchises have to feel comfortable to express their ideas and issues, when your expectations are not filled by the central office and need a reliable backup to know that something must be done to improve. Many times that is the impetus behind programs or policies are matters that belong to branches of the mark. Evaluating the franchisor as a response to problems arising in the branches and the support they can provide in the past 14 months speaks clearly as might be the type of help provided in the future.

 4) Is there some sort of incentive that can be offered to further improve our costs and increase revenue? Many franchise systems were adjusted to economic conditions by offering a variety of financial incentives to prospective buyers. Some offers reduced costs of allowances or reduce royalty payments for a set time, while others offer better training and other discounts. For example TSS Photography offered a "Stimulus Package" in 2009 that gave us the possibility to pay in installments the costs involved in franchising.This year Young Masters TSS and are offering a 50% discount on purchase.They are willing to return between $ 10,000 and $ 50,000 for each of those who want to buy a franchise in this 2010.

Such incentives are intentional in helping the lack of credit and thereby allow the economy to grow in this system and beat the competition. Importantly, they offered the franchise to be more productive and profitable in the beginning of our journey. Anyway it is much more critical to evaluate whether the system is in a position to maintain healthy growth despite collect less revenue than new franchises. Financial incentives should not come as support costs or innovation from the central office.

Whatever excesses to continue accommodating the new changes in the economy, remains a business with many advantages today.  Have idea as a franchise system was assisted and acted as leaders in difficult times, will herald make our experience in the system both in bad times as good.




Disclosure: long Mrk