Tom’s Franchise Information Blog

You know, generally speaking when there is a recession the franchising industry takes off like a rocket ship. This is because so many people are laid off from corporate America, the jobs are not coming back fast enough, and people know that they have to find something to do for a living. Often, if they can’t find a job they turn to starting a business of their own. Indeed, one of the easiest ways to start a business is to just buy a franchise with a perfect business model, and an attached brand name which is already proven in the marketplace.

However, during this last recession things were a little bit different. Franchising never really did take off like it normally does during recessions and this is because the commercial credit markets were so tight. And even as we exit the recession in a jobless recovery those folks out of work cannot afford to purchase a franchise because there are no banks or companies willing to lend the money. Will the franchising industry ever rebound from this conundrum and catch 22?

The answer is yes, absolutely. After all, it makes sense from a banker’s standpoint to lend money at the bottom of recession knowing that they will get the money back as all those businesses grow. It’s a safer bet from a risk standpoint. Therefore, there will be small business banks, and entrepreneurial capitalists who fund the growth of the franchising industry, there is a lot of profit to be made. Where there is profit, there will be investment and cash available.

Indeed, I wouldn’t worry about the Franchising Industry even a little bit, but there are those that are doubters, because they have not lived through very many recessions in the past. As a retired franchisor who’s been through recessionary up and downs a couple of times, it’s fairly obvious to me the franchising sector will grow stronger than ever in the future. Please consider all this.

Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes in franchising.