Entrepreneurs need to get a sense of the franchise market before they invest in a franchise. Those who are fortunate enough to have bank support are crunching the numbers, wondering if a franchise investment really adds up. We have an interesting dispatch today from the ‘coal-face’ of franchising, which might hopefully convince people that this is a sustainable investment.
The business trade magazine IndUS Business Journal has a very interesting story in their March edition that examines the state of franchising. The story looks at franchises like Mr Goodcents, EduFit and the Driven Brands stable. These franchisors are all resolutely confident about the franchise industry and many say they have never been busier.
Franchise Direct CEO Sean McGarry was interviewed in the piece. He talks about 2010 with a whole lot of optimism as wel. We’ve excerpted the part of the article that features Sean below and we hope you find it insightful.
Sean McGarry, founder and head of Franchise Direct, a company that generates franchisee leads for franchisors through its Web site franchisedirect.com, said that business has never been better. "In the month of January we have never been as busy in terms of new franchisors and the people coming onto the site," he said.
According to McGarry, in 2008 and into 2009 franchisor clients pulled back in terms of pursuing new franchise leads, but this started to turn toward the end of last year and the upswing continues into 2010. "I think we will see an increase in the number of new franchises as the economy begins to improve," he said.
Franchise Direct, which is based out of Atlanta and Dublin, Ireland, also runs a number of other franchise Web sites that target countries beyond the United States, such as France, Spain, Germany, the United Kingdom, Ireland and Canada. Started in 1998, the company works with 1,000 different franchises. Clients include Subway, Arby's and Little Caesars.
Economic woes aside, McGarry said that many franchisors over the last several years still had plenty of franchise leads, but there was more of a concern about the quality of the leads as people who lost their jobs looked for income. "It was a necessity rather than an option," he added. "You heard a lot more people using the term •buying a job.' • There was strong interest especially in low-cost franchises or home-based franchises [with a low barrier to entry]."
In McGarry's opinion this turned some franchisors off and was viewed as risky, not wanting to take a chance on people making a decision to franchise because they were "desperate."
"You are still looking for the types of individual that fits, that has skills in your area," he said. "But I think what it has done is increase the pool [of potential franchisees]."
Like Driven Brands' Schaefers, McGarry also believes the favorable real estate market will help coax franchisors into more aggressive growth plans in 2010. "Franchises are now in a strong position to negotiate on rent and leases," he said. "That is a positive thing in the industry."