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Every time you turn on the news, log in on the computer or open the newspaper, a major company is laying off 5,000 plus employees. Franchising has always soared when jobs are lost and no new ones are created. The current economic situation surrounding us is the worst in the history of the United States. It is now impacting the “global economy”. When we are having tough economic times no one is spared in the global market.
So why are franchise companies stuck in neutral, during what should be a good market for new franchisees? One of the major reasons is the lack of lenders (funding). First of all, I believe the consolidation of the banking industry is nearing an end. This was and is a huge problem, and the primary reason our government is now getting into the act and looking at taking over some of this bad debt. If you are the US government can you afford to let the banking system collapse? The answer is “no”. They can and will regulate and create better guidelines. For those in the banking system that have weathered the storm, how long can you stay out of your primary business which is lending? If you are one of the few that is lending you have free choice over the risk factor.
We are already starting to see the private sector push some funds into the lending market. Where else can you find a safe haven for your money? If your funds are with a lender that has no financial issues and has solid lending practices it is a better bet than the stock market. I have personally seen two lending sources throw in towel and recently receive “new sources” for funding and come back to life. This is a good sign!
If you have an existing business that you feel can become a good franchise concept, get the ball rolling now. Put all your information together and position yourself during the present times so you can pull the trigger six to nine months out. Someone once said, it’s not always the idea, but the timing that matters the most.
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