|Franchising is doing better than most industries, experts say, and next year may be a particularly good time to own one. Five Guys is a burger chain with some 1,200 stores in development.|
In 2009, the franchising industry lost 400,000 jobs. Last year, the industry grew at just 0.03%, basically flat, according to Steve Caldeira, CEO of the International Franchising Association. This year, the industry was projected to grow jobs by 2.5% and economic output by 5%. The number of jobs added will likely come in a little below expectations, but that's better than a decline, Caldeira notes. "The big issue has been a lack of credit to meet the demand for
Besides bank loans, other avenues to get financing are being created, including borrowing against equity in your home at all-time lows and rolling over 401(k) investments into a business without penalty. Next year "probably has one of the bleakest outlooks in terms of improved levels of employment," especially since midlevel manager and C-level jobs are few and far between, says Shelly Sun, CEO of BrightStar Care. "If you're going to be able to find a job, isn't it better to bet on yourself in uncertain times than hope for the best?" But there is another trend industry participants are picking up on: Downsized co-workers are looking to partner with each other to buy and operate a franchise. "We're starting to see a normalized set of new buyers," Sun says. "They know their chemistry, know
Given low interest rates and market space available, it's a buyer's market not only on residential homes but commercial leases as well. "Leasing commercial space is easier and cheaper now, so when starting a franchise that requires a commercial space, the possibilities of getting a good deal at a great location are better now than when the economy is in full steam," Ramon says. According to the most recent economic outlook by the National Association of Realtors, vacancy rates in the commercial real estate markets are in the double digits. While they are expected to improve somewhat in 2012, of the four major sectors -- office, industrial, retail and multifamily -- none are projected to improve their vacancy rates more than 1%. "Vacancy rates are flat, leasing is soft and concessions continue to make it a tenant's market," according to a Nov. 28 statement by Lawrence Yun, NAR's chief economist. "However, with modest economic growth and job creation, the fundamentals for commercial real estate should gradually improve in the coming year."
These days, with credit so tight, franchisors are making it more affordable and offering more support to own a franchise. Pet waste removal company DoodyCalls is offering new franchise owners partial reimbursement of their advertising expenses -- $12,500 in their first year, so long as the money was spent according to the company's approved marketing and promotion plans. "It's just really important to advertise your business to grow," says DoodyCalls founder and CEO Jacob D'Aniello. "We wanted to put money where our mouth was in how much we truly believe in this." DoodyCalls has three primary lines of business. The company removes pet waste from residential yards, has a kitty litter swap service and works with communities and homeowner's associations to service pet waste bags and receptacles. The company also recently launched an e-commerce component to sell pet waste equipment, products and services to commercial properties, a major growth market for DoodyCalls. It plans to expand DoodyCalls Direct with additional pet products for homes. D'Aniello says while the company has been around for 10 years, it's only recently that pet owners are realizing that this type of service is available. That's why DoodyCalls emphasizes local marketing when a franchisee takes over a territory. "Pet waste is bad for the environment, and increasingly with the green movement people are more aware they need to be picking up after their pet on a regular basis," D'Aniello says. "Communities are becoming increasingly aware that they need to keep their communities clean and neat, and they are willing to pay for the service." DoodyCalls has 55 locations and is aiming to reach 250 over the next 10 years. "For our business specifically, the greatest hindrance is still that people don't know that they can call somebody to do this service," he says. "There is a huge opportunity to win people who are not currently in the market." 5. Plenty of talent to hire
Given the state of unemployment, it's a great time to hire talent. Franchisees can pick up some well-qualified workers who may not have been available otherwise. Some franchisors also feel it's their responsibility to provide jobs. "Being an entrepreneur means you are creating jobs and helping to rebuild the economy. Simply put: it's the American thing to do," D'Aniello says. -- Written by Laurie Kulikowski in New York. To follow Laurie Kulikowski on Twitter, go to: http://twitter.com/#!/LKulikowski To submit a news tip, send an email to: firstname.lastname@example.org.
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