Just as we’ve managed to navigate our way through the disruption of the COVID pandemic, we’re now facing the economic uncertainty of spiralling inflation and rising interest rates with the prospect of a long-term recession on the horizon. So, is now really a good time to be talking about investing in a franchise? Or could that be the first sign of madness?
Let’s be clear from the start, franchises are certainly not immune to the economic pressures that all businesses will be facing right now. Having said that, there’s good reason to feel more optimistic about launching a new franchise in the current economic climate than an ordinary independent start-up business. And here’s why:
Enjoy the backing of a powerful established network
Even in the face of all the negative media headlines and the general air of pessimism sweeping the country right now, the strength that comes from joining a well-established and successful organisation is truly empowering. These firm foundations are one of the main reasons why franchisees have a better chance of success than other businesses.
The benefits that come from being part of a big group are practical, as well as emotional. Franchise networks have strength in numbers which gives them greater buying power and the cost savings that come with economies of scale.
Guidance from business experts who have seen it all before
Depending on your age, you might be about to face your first recession as a working adult. However, many of us were involved with businesses during the last economic downturn in 2008. A long-established franchise organisation is bound to have plenty of this kind of experience in its ranks, ready for you to tap into.
Make sure you have long conversations with the franchise experts before you jump on board. Find out how they made it through the last recession and how their learnings can help the franchise holders this time around. Ask all the questions on your mind. Leave no stone unturned. The more you know before you start, the fewer surprises you’ll have to face along the way.
You’ll also have the chance to learn from the experiences of other franchisees in the network. Knowing how they are reshaping their businesses and processes as they prepare for the rough trading conditions ahead will increase your chances of making it through unscathed. The important thing is knowing you’re not alone and that you have qualified experts in your corner should you ever need them.
Choose your industry sector carefully
While no sector will be completely recession-proof, some are more likely to fare better during a tough economic climate than others.
Take the recent pandemic, for example. Technology businesses flourished during this period with the sudden need for new digital services to help companies adapt to the challenges of remote working. Many hospitality businesses, on the other hand, came to an abrupt and complete standstill during the long periods of lockdown.
In good times or bad, you need to make sure you do your homework to establish which industry sectors are likely to be the most profitable in the coming years. Of course, it’s not just about the sector. Some franchise organisations are simply better organised, better equipped and better placed to thrive in good times as well as bad.
Securing finance needn’t be a problem
With the well-publicised rising interest rates, this isn’t an ideal time to be looking to borrow money to set up a business.
However, if that business is a franchise then you’ll have a much better chance of securing the finance you need than if you’re a truly independent start-up. That’s because lenders are more likely to part with their money when a potential new business is part of a large group with a proven track record of success. With all the practical support available to help a new franchise owner join the organisation, the risk for the lender is significantly reduced.
With access to the money you need, an experienced and highly-qualified support network and a tried-and-tested business model, now really could be as good a time as any to start your own business as part of a flourishing franchise network.
It could even be the best time. After all, if you can make it work now, just imagine how successful you could be when the economy picks up again.
If you would like to find out more about Swimtime, the UK’s largest independent swim school, and our successful franchise model, please just follow this link. We’d love to hear from you and answer all your questions with no obligation whatsoever.