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Will a Possible Recession Affect Aspiring Franchise Owners?

After successfully recovering from a major recession just over a decade ago, the threat of another economic downturn looms over the business community like a dark cloud.

Many people are concerned about the impact of economic uncertainty on franchising. As a franchise consultant, I am frequently asked this question, and my response surprises people.

In my opinion, a recession has no effect on franchising. This is due to the fact that franchising is not an industry. It is a business strategy. A recession has an impact on the industry in which the business operates.

Certain franchise industries are less susceptible to economic downturns than others.

A downturn in the economy can have a positive or negative impact on retail franchises. Storefront franchises are frequently reliant on in-store traffic and customer sales. People may reduce their spending on things like dining out, clothing, and travel when times are tough.

As a result, retailers in these industries may suffer. If, on the other hand, your storefront business is check-cashing or dollar stores, you may fare better during an economic downturn.

Home-service franchises, on average, are more neutral, which means that no matter what happens in the economy, franchises will continue to operate. The demand for these services is greater and less reliant on discretionary spending.

It's crucial to remember that some industries are countercyclical. This means that when the economy slows, their business grows. Outplacement services, credit services, or inexpensive haircuts are a few examples.

When the economy slows down, I frequently speak with people who believe franchise financing is unavailable. This is untrue. In my experience, regardless of the economy, financing is very similar.
Franchises can be opened with success in a strong, weak, or average economy. All that matters is that you are prepared to put in the effort, thoughtful and balanced in setting your expectations, and careful about the industry you are considering.

If you’d like to talk about franchises in the current economic conditions, please schedule a brief call with me.

Choosing The Size Of Your Franchise

The dream of every new franchisee is to have a sizable business. For a variety of reasons, including financial constraints, a lack of skilled labor and management, and even access to suppliers, it might not be feasible.

As a result, before purchasing a franchise, you should consider all franchise options available to you.

The Big Names
Think of Starbucks and McDonald's. These franchises are well-known and well-funded. They have a strong market presence and a proven track record, thanks to their experienced and seasoned management team.

Upside
These are low-risk ventures that may be recession-proof. Due to their large audiences, these franchises also have greater geographic reach and coverage.

One of the primary reasons for selecting these franchises is that you already have a customer base. People are already familiar with the brand and can easily rely on it more than any other franchise in the same sector.

Downside
Their greatest asset is also their greatest weakness. Because of their large market value, they frequently compete with other large brands, resulting in intense competition. As a result, this competition causes sales to fluctuate at times.

They also have higher entry fees by default because the brand has established its own value and presents less risk to the franchisee. As a result, the initial investment in these larger franchisees is substantial.

Stars on the Rise
These franchises are gradually expanding their customer base. As a result, they are looking for franchisees to help them expand their brand, so it is no surprise that they welcome franchisees and offer incentives.

Upside
These franchises are less difficult to establish than larger franchises. In addition, because of the low investment requirement and flexibility, there are more options for a faster start-up.

Downside
While a smaller franchise is expanding, there may still be bugs in their system. This could lead to issues with implementation, among other things.

Both of these franchise sizes have advantages and disadvantages for different people. It all comes down to the prospective franchisee's position and what they have to offer the franchisors.

Depending on your local market conditions, a Rising Star franchise may outperform a Big Name franchise in a competitive market.

If you would like to discuss your ideal franchise size, please schedule a brief call with me.

6 Ways to Maximize Your Discovery Day

When you've narrowed down your franchise options and are getting closer to making a decision, you'll likely receive invitations to what's known as a franchise Discovery Day.

These are typically events held at corporate headquarters where the franchise meets with you, answers your questions, and displays proprietary equipment, among other things. You will almost certainly meet other potential franchisees.

You're there to further evaluate the franchise opportunity, but you're not the only one doing so. Corporate representatives will watch you throughout the event to see if you fit their ideal franchisee.

They've been doing this for a while and know what kind of person would be a good fit for their team. As a result, they'll be watching you just as closely as you're watching them. So take advantage of this opportunity.

Typically, the Discovery Day invitation arrives when you are about to make a decision about whether or not to commit. It is significant. You should treat it as such. Use these six tips to put your best foot forward that day and make the most of it.

  1. Keep your objectivity. Make sure you don't get swept up in the presentations and demonstrations.
  2. Take it seriously because it is. Dress appropriately for the occasion, and if in doubt, dress one degree nicer than you think you should. Throughout the day, be punctual, polite, and professional.
  3. Do your research. Learn more about the industry and fill in any gaps in your understanding of the franchise.
  4. Take note of the culture and how people interact, both from corporate and any other potential franchisees who are in attendance.
  5. Pay attention and follow directions throughout the day. Successful franchises are built on systems that can be replicated.
  6. Prepare to feel overwhelmed. Throughout the day, you will most likely be flooded with information. Carry a notebook with you to write down notes if necessary.

Treat Discovery Day as an important event by putting your best foot forward and paying attention to what is happening around you.

Find out more about preparing for Discovery Day by scheduling a brief call with me.

Why Do So Many Entrepreneurs Choose Franchising?

Running a franchise is far more appealing to many entrepreneurs than starting a business from scratch. You can save years of time and feel more confident that you are prepared for success by knowing that you have a proven franchise system that includes training, support, and marketing.

Deciding to become a franchise owner is a big one. One of the primary reasons why entrepreneurs choose to buy a franchise is the increased likelihood of success in the first few years of operation.

Starting from scratch requires you to hire staff, develop a marketing strategy, develop an advertising plan, and establish brand recognition from scratch. You will also have to implement all processes on your own. In the majority of franchises, the franchisor handles many of these components.

This isn't to say you won't have to work hard, but franchising allows you to implement tried-and-true strategies, avoiding the trial-and-error period that new businesses face.

This business model is not for everyone. However, for many entrepreneurs, having an existing franchise team to support you with set-up advice, franchise details, marketing strategy, and advertising materials can help streamline operations and allow you to focus on other areas of your business.

It's no surprise that many entrepreneurs prefer franchise opportunities because the support of a franchisor can help alleviate some of the start-up stress.

If you are excited to explore your entrepreneurship options, please schedule a brief call with me.

How to Buy a Franchise When You Don’t Have Any Money and Bad Credit

Many people fantasize about starting their own business. However, one of the most significant hurdles is a lack of capital to get started or poor credit, which stops them from financing a franchise.

The good news is that even if you have poor credit or no money, you can still obtain the financing you want to purchase a franchise.

Maybe you have poor credit but expertise and experience in the franchise's industry. Then you might be able to find a lender ready to take a chance on you.

Keep in mind that lenders are typically more ready to provide you with a loan for a franchise purchase simply because there are fewer risks involved versus starting a new business.

This is because a franchise comes with a known brand, established customers, and a proven track record, which makes them appealing to lenders, especially if the borrower has industry experience.

If your credit is less than stellar, your best bet for obtaining a franchise loan is through the Small Business Administration (SBA).

The government guarantees a portion of SBA loans to borrowers, lowering the lender's risk of loss. Most lenders like this arrangement, but it is especially important if the borrower has poor or no credit.

Remember that before you may acquire an SBA loan, a bank must reject you. After a bank declines your loan application, that bank or another can submit it to the SBA for review.

Additionally, you can search for a smaller franchise that would cover your business costs. They'll let you pay it off with your other monthly royalty payments. Or maybe even one on resale. 

These franchises that are willing to help you in getting started are an excellent option to enter into franchising with little or no money and poor credit. It might be a stepping stone to a larger franchise investment in the future.

The bottom line is that you can continue your ambitions to become a franchise owner. Even if you have limited cash and bad credit, you have choices.

If you have questions about what to consider for franchise investment, please schedule a brief call with me.

How Mindful or Mind-Full Are You?

When you are mindful, you pay close attention to what is happening around you while enjoying it.

One strategy is to close your eyes and imagine you are on the bank of a river, watching your thoughts as they float by. Some would consider this a type of meditation.

There are several ways to cultivate mindfulness. Paying attention and doing something that needs mental concentration, feeling comfortable and calm, and accepting what is occurring are all a part of the equation.

We are more inclined to be creative and productive when we are mindful. In addition, according to recent studies, daily mindfulness practice helps people be less judgmental and make better decisions.

GAF Avoidance

When our minds are full, we are filled with neither beneficial nor productive thoughts. These are GAFs, which stand for Guilt, Anger, and Fear because they frequently cause us to make poor decisions.

Guilt is something we regret having done or not done. We believe we could have worked harder or demonstrated greater self-control. These are the standards we hold for ourselves.

Anger is the result of what has happened that we don't like. It stems from disappointed expectations, typically of others. Our minds will become more and more occupied with these angry thoughts the more entitled we feel.

Fear results from our preconceived worries and uncertainties about what may go wrong but most likely won't. As a result, FEAR is also known as False Expectations Appearing Real.

How To Stay Present

  1. Take a proactive approach. Positive activity is the most effective approach to eliminating guilt and boosting confidence. Begin with little steps.
  2. Avoid becoming a Diva. When you are more receptive to people and ask about what they require to achieve their best, you will notice that your angry, irritated thoughts begin to fade. Be thankful.
  3. Identify the fear. Recognize it for what it is. Like insecure bullies, they parade around in our minds, trying to scare us. But when we expose them and call them out for what they are, they leave. Likewise, most fears can be avoided if we approach issues with mindfulness.

If you would like to talk about the importance of mindfulness and how it can help you, please schedule a brief call with me.