Franchise Ownership Offers Comfort In Tough Economy

Franchising Has $1 Trillion Impact on Economy, Report Says

(Saturday, March 29, 2008) - A period of economic uncertainty is not the time to sink one's life savings into a restaurant or shop, but it may be the perfect time to consider owning a service franchise, according to local franchise consultant Cheri Carroll.

One factor in franchise choices is home equity — how many new franchisees financed their businesses in the past, she says.

"Since equity loans aren't as available or as generous as they once were, service businesses with their much lower entry costs offer a path that many are taking to beat the economic blues," said Carroll.

An 11-year volunteer with the San Diego chapter of Score, a nonprofit organization providing free consulting and inexpensive workshops for small businesses and new startups, Carroll was recruited by Score to provide franchise expertise.

"While a franchised sandwich shop may cost $120,000 or more for the build-out and equipment, or $300,000 for a retail shop, a service business can cost as little as $20,000 to get started, with almost no overhead," she said.

Some growing service businesses among San Diegans are Gurnee, Ill.-based BrightStar Healthcare and Sandy, Utah-based Spectrum Home Services, which offer nonmedical services to seniors such as running errands and yard cleaning.

Consulting businesses such as the Carlsbad-based Expense Reduction Analyst, along with executive training services such as the La Jolla-based Renaissance Executive Forums also offer popular franchising opportunities, says Blair Nicol, president of the Louisville, Ky.-based Franchise Network Group's San Diego and Orange County operations.

The Numbers

With a countywide unemployment rate of about 5 percent in the first two months of 2008, up from about 4 percent in early 2007, according to the Employment Development Department of California, franchising is bigger than ever in San Diego, says Nicol.

Franchise businesses now make up $1 trillion in U.S. direct economic output, according to an International Franchise Association report sponsored by the U.S. Small Business Administration.

More than 3,000 companies are franchising nationally, and franchise businesses account for more than 50 percent of total retail revenue, according to the report, which was released in March.

"High-level executives are saying they don't want to go through layoffs again, so, ready to leave the corporate world, they're using severance packages to start a business," Nicol said.

He says that former business executives are ideal candidates for franchising because they can apply their existing skill sets in a white-collar environment, while investing between $80,000 and $100,000 in office-based types of franchises such as executive coaching, financial consulting and information technology businesses, as opposed to a storefront business that costs a minimum of twice the money.

View all Press Releases

This article has been read 54 times.

Printer Friendly