It wasn’t long ago that becoming a franchisee was the business startup of choice for those with a medium to large amount of capital and the resources and experience to start a larger scale business. This changed when the financial crisis hit and credit dried up. With the average franchise fee being $20,000 to $30,000 plus real estate and other related costs, without a generous credit market, many will have a tough time finding the funding necessary to open a franchised business.
2011 may be different, though. Some small business experts believe that after three years of hibernation, the franchise may be waking up to make a big charge back to the forefront of small business creation. There are three reasons for this.
Credit is Coming Back
It’s finally happening. Banks are once again lending. Although the Obama Administration proudly bragged that they had put stimulus measures in place to encourage banks to once again lend, it is only now that we’re seeing an increase in lending. Much of this is credit to programs offered by the United States Small Business Administration who guaranteed small business loans. This allowed local banks to begin lending to those who would not have otherwise qualified for funding over the past three years.
Property is Still Cheap
Most of the economy is improving but much of the real estate market is still struggling. Some are still predicting a double dip recession in the housing market and because of that, foreclosures are still widespread and short sales are a mainstay. Commercial real estate isn’t faring any better than residential markets. Of course this is highly unfortunate for the many hard working Americans but this cloud does have a silver lining.
The real estate market is full of great prices that haven’t been seen in over a decade. Prime real estate in those million dollar locations are now available at prices that allow just about any future entrepreneur to afford them. If location is the key to a thriving business, now’s the time to find those great properties.
The days of franchise greed are over. Prior to the Great Recession franchise fees and other terms made the best franchise opportunities unavailable to many business owners. What was worse, because of the artificially booming market conditions, franchise opportunities without healthy balance sheets crumbled in the wake of the financial meltdown.
Today, things are different. Franchisors now offer lower startup costs, more assistance, higher margins, and faster profitability. With fewer people eligible to be a franchisee, those offering these opportunities now find themselves competing. It’s a franchisee’s market.
If you once discounted a franchise as a business startup, think again. Many of the best franchise opportunities with the greatest profit potential are within arm’s reach of even the newest investors.