Franchise Lawyer Blog

Franchising: Boom or Bust?

Some have concluded that franchising growth is based upon macroeconomic trends that cannot be expected to rebound to the same levels that existed prior to the last bust. A recent piece by Garth Snider of FranchiseOpoortunities Network warned of the dangers of wishing for yet another liquidity fueled bubble driving growth in the franchising space at a rate of 4 or 5%, which would prove to be as unsustanable as prior to the Recession that has supposedly ended. Mr, Snider was referring to the IFA’s perennially sunny global outlook, recently tempered somewhat, when he cautioned that franchising needs leadership that does not push for growth for growth’s sake, but rather plans for growth on an achievable model of more carefully applied liquidity. He also dismisses the oft-heard chestnut that “franchising does better in a recession.” the IFA’s rvised growth fuigures do not appear to support that premise.

Meanwhile, the Wall Street Journal’s Small business section recently pointed out that tighter times in the franchising world are highlighting tensions between franchisees and management. The piece task about multi-franhcisee claims against Cold Stone Creamery, Burger King and Edible Arrangements, the inference throughout being that more are sure to follow.

As always, a closer analysis reveals a more complicated picture. Yes, some segments of the franchising world are suffering, but others have hit theor stride in these particularly dificult time. the question may not be whether or not to get into franchiing and instead, which area to get into.A recent piece in the Oregon Business News charted franchise growth by sectors. Health care and fitness centers showed strong growth, while real estate services, financial services and video rentals lagged badly.

On an individual level, then, perhaps the best advice is to be neither frightened away from nor too strongly drawn to, franchising. Rather, take a look at the business opportuniyt, the secotr in which it operates, the location and your own capabilities when evaluating whether a franchise is the right investment/opportunity for you.

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