8 Reasons Franchising Is Growing
Economy Pushes Mid-level Managers into Owning Their Own Businesses
Franchising is a growing industry for good reason. With a higher success rate and proven plans, franchise businesses allow would-be entrepreneurs to achieve their dreams.
The news media is filled with stories of a slumping economy and businesses that are struggling. But those stories miss the boom that's happening in the franchising industry, which has shown growth regardless of the economy. According to the International Franchise Association, the industry expanded by 18 percent between 2001 and 2005. Recall that 2001 to early 2002 marked another economic slump in the post-September 11 world. The IFA also reports that direct economic output of the industry grew by 40 percent, tallying $880 billion, over the same period.
Here are some of the top reasons the franchise industry is continuing to expand:
- Franchising is for virtually anyone with some general business knowledge and access to the required start-up capital. Top franchises in the industry have excellent training programs, which turn novice candidates into franchisees.
- There are franchise opportunities for any kind of budget. The field has franchise opportunities for those who can invest more than a million to those who can just come up with $20,000.
- Getting a business loan is made easier since the name of the franchise acts somewhat as collateral for the franchisees. Those concepts that are just going national or are emerging franchise opportunities either have relationships with third-party financial lenders or are registered as small-business franchises.
- People patronize franchise businesses because they get the same product/service no matter where they are located. In some franchise businesses, such as senior care or maid services, branded franchises provide people with impeccable backgrounds. That offers an assurance that money can't buy.
- Franchisees usually have better profit margins than stand-alone business owners, because the franchisor can procure materials at discounted prices. That is passed to the franchisees, who can pass it on to the customers, creating a loyal base.
- The recent economic slump has pushed middle managers and entrepreneurs out of corporations and into great business ventures. That's raised the number of new franchise businesses in the market. Also, as they had larger financial resources to tap, many of them have become multi-site owners, which has led to rapid expansion.
- People are also starting franchise businesses instead of stand-alone businesses, because they don’t want to gamble with their hard-earned money. Business always has the possibility of failure, but the franchise business has a lower risk-rate; it has a model that has been tested and perfected.
- Franchising is also growing because people who want to strike it on their own may still be afraid of making mistakes by being alone. Franchising gives them the best solution; they become owner of a flourishing business, but can always turn towards their franchisors for help solving any business-related problems.
