Are You a Franchise Player?
There is a collection of articles in Tuesday's Wall Street Journal on franchising. The most interesting story is a piece on picking a franchise. The tips are geared toward the owner who needs a business that can weather an economic downturn.
There are a couple tips that apply to anyone looking to start a business - from scratch or a franchise:
"Stick to core goods and services." Sell the stuff we need to buy. A recession is going to deplete consumers' disposable income. They will cut back on fast food, luxury goods and services. But repair services become more popular as people can't afford to replace goods.
"Be choosy about a site." In other words, location, location, location. Here's the best quote of the story:
"You pay for a good site once, and a bad site every year in terms of low volume and low profits," says Dennis Lombardi of WD Partners, a Dublin, Ohio, store-development firm.
Don't pinch pennies. You're going to need to be well funded. Expect sales to fall 5 percent to 10 percent in a recession.
There also is a piece of advice about competition for franchises. During layoffs, many workers look toward starting their own businesses. You're not the downsized entrepreneur-wanna-be. You're going to face some competition for financing too.
Here are the rest of the articles:
List of 25 Top Performing Franchises
A Look at High-Performing Franchises
Quiz: Test Your Knowledge of Franchising
Q&A: Franchise Funding in the Credit Crunch
Hold That Thought
If you're looking at franchises, consider something else. This is Maine, and there is a resentment toward institutions from away. If you don't believe me, try walking on Congress Street in Portland while asking people where to find the Hooters restaurant. (Be sure to use the word restaurant or you're going to be called a pervert.)
But talk of locating a restaurant so close to the Old Port (I don't consider The Stadium to really be Old Port.) prompted a temporary ban on chain businesses in the area. Yes, the waitress uniform had quite a bit to do with the controversy. But Portland City Council used a ban on a type of business not a dress code to stop it.
You might be able to generate better goodwill and public relations if you start from scratch. But the Wall Street Journal does make a point of encouraging you to buy an established brand for a reason. Those well-known businesses from away do tend to weather economic storms better than a less expensive franchise.
Consider both sides to this argument. The franchise can be the way to go. Some brands are loved or tolerated more than others. Or maybe you need a local look and feel to succeed.
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