Several years ago, entrepreneurship became the career path of choice for many victims of corporate layoffs and downsizing. But although the uncertain economy and unstable job market have improved considerably in recent years, business ownership remains a popular means of employment.
Within the broader category of entrepreneurship, franchising — becoming an independent owner and operator of an existing business model — has become a smart option for individuals who want the freedom of owning a business without the pressure of creating a concept from the ground up.
"Franchising as a whole is going to continue to be a very relevant part of our economy," said Aziz Hashim, president and CEO of NRD Holdings, Inc., an organization spearheading a franchising equity fund. "[With] continual changes in the marketplace for jobs, people will have to rely more and more on self-employment as a means of financial security. Studies show that the risks associated with franchises are significantly lower than [with] starting your own business, which will drive franchising even further."
"Franchising is a powerful business model and an amazing vehicle for growth," added Christopher Conner, president of Franchise Marketing Systems. "If done right, franchising can supercharge an economy by fueling entrepreneurial growth in jobs, output and productivity. Franchisees win with a defined system, economies of scale, branding and a business system that should offer mentorship, support and guidance to a successful business platform."
As more aspiring entrepreneurs look into franchising as a viable path to business ownership, experts shared their thoughts on emerging industry trends and how potential franchisees can take advantage of them.
More technology franchise opportunities
New tech startups launch every day, and many of them seem to fail just as quickly. But the tech market shows no signs of slowing down, and in the world of franchising, technology-focused business are booming.
"We see an enormous opportunity in the technology space for franchise growth," Conner told Business News Daily. "This growth has been in both retail models and in work-from-home-type franchise businesses. Because of the overwhelming increase in demand for technology and reliance on IT in both our personal and business lives, we see this trend continuing to expand for the foreseeable future."
Conner noted that mobile tech repair and service, computer repair and SEO/Internet marketing service models are among the fastest-growing technology franchise segments. [For a side-by-side comparison of the best online marketing services, visit our sister site Top Ten Reviews.]
The Internet has enabled companies of all sizes to expand overseas and conduct business in foreign markets. While smaller, independent businesses may have a difficult time building and establishing their global brand presence, a franchised company can achieve international success relatively quickly by opening locations wherever there's a market for their product or service.
"Franchising is a tremendous export," Hashim said. "In emerging countries [where there is] urbanization, there's more desire for higher-quality products, especially U.S. brands."
International expansion can fulfill a need or void in an emerging market with a proven franchise system and create a potential first-mover advantage within that market, which, in turn, significantly increases global brand awareness, said Neal Courtney, chief operating officer of business printing and shipping franchise PostNet. This approach also enables franchises to test new offerings and services, and diversify and optimize an existing franchise model to meet local demand.
"It's helpful to partner with sophisticated master franchisees that understand the market and can quickly penetrate and expand," Courtney said.
A word of caution to franchisors and franchisees looking for international opportunities: While you want to remain consistent in your branding efforts, not every element will translate well in a foreign culture.
"The challenges come when deciding how to adapt one's brand into another country's culture," said Anthony Padulo, executive vice president of domestic and international development at senior care franchise BrightStar Care. "We have all seen brands that have failed to expand internationally because they were too rigid with their brand, and others who have failed because they were too loose with their brand. A business really has to decide what is sacred to the brand identity and to their business model before trying to expand overseas."
The one obstacle many would-be franchisees face is financing. Franchise buy-in fees are often higher than the average person can afford outright, and even the least expensive ones typically cost tens of thousands of dollars. Since obtaining a business loan can be difficult for first-time entrepreneurs, some franchises have set up internal financing programs to help more individuals become a part of their business.
An internal financing program may mean less financial gain for a franchisor up front, but it can greatly benefit a potential franchisee who otherwise couldn't have afforded the opportunity. Tax preparation franchise Liberty Tax Service has offered internal financing options since its inception, but following the recent recession, it became a necessity to continue growing the company.
"We had prospective franchisees come to us after they'd been downsized from corporate America," said founder and CEO John Hewitt. "They had researched Liberty Tax Service and found it a good fit, but the banks were not inclined to lend to them because they lacked experience. Liberty was able to weigh whether they were a good fit and, if so, to provide seed funding. The successful entrepreneurs were then able to get traditional financing to open more franchises and grow the Liberty system."
Though the credit market isn't as tight as it was a few years ago, Hewitt said internal financing programs will continue to provide franchisees with ready access to the capital needed to seize opportunities and to respond quickly to changes in their environment.
Parents and their children have been working together for generations in family business settings. Now, baby boomers and their millennial children are increasingly teaming up for a different kind of business opportunity: franchise ownership.
"Teaming together to invest in a franchise is a natural partnership for both [sides]," said Terry Powell, founder and CEO of franchise business coaching company The Entrepreneur's Source. "Parents have the funds and are looking for a better investment, [and] their children are looking to start their professional career."
The economy has taken a toll on both the oldest and youngest generations in the workforce, which Powell believes is the reason these parent-child teams are increasingly looking at franchise opportunities. Boomers have some money saved up from their decades-long careers, but not enough to retire on. Meanwhile, millennials often find themselves unemployed, underemployed or underpaid, and need a better path to financial stability. Powell noted that the general personality traits of each age group have also driven the trend toward business ownership.
"The baby boomer generation [wants] a 'second act' career that offers independence as well as benefits and structure, which is often found in franchising," Powell said. "Millennials are a generation driven by risk and innovation. With limited job opportunities and natural independent drive, the entrepreneurship and stability of franchising is an appealing career path for millennials."
No matter what your entrepreneurial goals are, choosing the right franchise system to buy into can help you achieve them.
"Do your due diligence [and]take a look at the brands, business models and opportunities [available]," Conner said. "If you spend time with good franchisors, you will see why so many have chosen the franchise route to build futures, fortunes and better lifestyles."
Originally published on Business News Daily.