by Mille Tappe

Created on: June 17, 2008   Last Updated: June 23, 2008

When is poor economic performance good news? When you are considering buying a franchise.

There are many reasons why a sluggish economy makes for a good time to buy a franchise business. For one, the cost of borrowing is low. To be certain, lenders are also more conservative during poor economic conditions, but this is actually one of the advantages of a franchise business over an independent. A franchise business proposal is one that is based on a tried and true business model, which has built-in supports and checks and balances. Often there is an existing successful business plan which only needs customizing in order to bring to lenders. In short, buying a franchise makes you more appealing to lenders, and you capitalize on today's low rates of borrowing. What's more, some franchises offer access to third-party loans.

Another aspect of the struggling economy which presents an opportunity for franchise businesses is unemployment. Many skilled and hardworking individuals are unable to find rewarding employment in this economy. This makes for an attractive field of candidates when it comes time for the franchise business to hire. Indeed, many people come to buy a franchise business partly to control their own employment destiny. Owning a franchise business means never fearing being laid off or "downsized" again.

Of course franchise businesses are not foolproof, and you could still end up unemployed if your business fails. However, estimates of franchise failure range from 5-30%, whereas estimates of independent business failure range from 30-50%. If you are cut out for business ownership, franchise businesses are far less risky.

This is thanks to the basic structure of franchising, which is about sharing and support. Shared advertising costs mean greater advertising presence at less expense. As well, franchises often require a minimum advertising expenditure, which eliminates the temptation to cut the advertising budget, a mistake independent businesses make routinely. Shared purchasing means volume discounts, and greater negotiating power with suppliers. The support system of franchises is often one of the most attractive elements to entrepreneurs. From initial training through to ready-to-use policy books and manuals, there is much less reinvention of wheels in franchise businesses. Franchisees often have access to mentoring networks within the franchise, through which experienced franchisees provide information, encouragement and advice.

The appeal of buying a franchise business is not new, as evidenced by the thousands of longstanding successful franchises in existence. What many would-be entrepreneurs are realizing today is that current economic conditions make that opportunity more appealing than ever.

Learn more about this author, Mille Tappe.
Click here to send this author comments or questions.