Bad Economy, Good For Franchising

by Jeff Northrop

It's common knowledge that the US franchising industry expands as the US economy dips. At first blush this doesn't make sense but let's break it down. As the economy heads towards a recession, corporations start to lay off workers. These folks are unfortunately out of work at a time when the job market is just getting tight. As a result they start to look at alternatives. Many will start their own business and some in that group will turn to franchising to help get a leg up on starting a new business. As a result the franchising industry expands.

The news is littered with coverage of the current situation with the US economy. The recent rise in interest rates brought to light a spate of overly-agressive lending which has stuck millions with loans they will not be able to pay back. As companies go public with their exposure to all of those bad loans it is looking like we are heading towards recession (although it certainly is not inevitable).

If a recession comes to pass, and you are among those who seize the opportunity to start your own business, keep an eye out for overly-agressive franchise companies and related services. Just like those lenders, they'll be agressive about recruiting new operators, so before you invest in a franchise pay attention to the lessons learned in the lending industry -- do your homework, then do some more. Know what you are getting into.

Good franchise opportunities are available in almost every business sector, just take your time to find the right one for you.