Peter Nowak is used to putting all his eggs in one basket. In May 2008, as the U.S. was in the throes of the recession, he founded Eggfast, a quick serve, breakfast-only concept. Now, even as established franchise systems are struggling, he’s preparing to start franchising the business in January 2010. But Nowak is not alone in his new franchising endeavor. Zoom Room franchised its brick-and-mortar dog-training concept in September; Bagger Dave's Legendary Burgers & Fries just announced the aunch of its franchising program in November; and Cornzapoppin Franchising LLC followed shortly behind with a gourmet popcorn franchise.
It might seem counterintuitive to be thinking expansion when the whole country has just undergone major contraction, but, for these entrepreneurs, the time feels right. Are they making a smart move — will 2010 actually be a great year to franchise your business?
“Newly created franchise programs will be in the right place for the post-recession business expansion that is sure to begin in 2010,” says Andrew A. Caffey, a leading franchise legal expert who cites the loosening of credit and lending and new government stimulus funds as the major factors that will spur such expansion. “This could be a fantastic year to launch a new franchise program.”
Christian Faulconer, CEO of Franchise Foundry, a franchise development firm, wholeheartedly agrees. “If you are willing to explore new growth strategies, I believe that 2010 will be a great year to franchise a business,” he says. “We are in the middle of a major transition in the franchise industry where old growth strategies are being challenged and new strategies are emerging.”
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Before You Franchise Your Business . . .
While 2010 might actually shape up to be a good year to franchise a business, the waters are still rocky and require some careful navigation. So how do you know if the time is right? Christian Faulconer, CEO of Franchise Foundry, believes that 2010 could be the right time to franchise your business if:
- Your business is proven and profitable. "Being able to make an earnings claim is more and more important," says Faulconer.
- Someone could purchase and open a franchise without depending on traditional lending. "Growth strategies that are dependent on traditional lending will struggle in 2010," he says. "This doesn't mean that your franchise opportunity should be inexpensive, it just means you should be willing to look at non-traditional funding alternatives."
- You are ready to spend money on marketing. "Franchisors can't rely on some of the old standbys when it comes to lead generation," he says. "The old standbys like lead generation portals might be part of your strategy, but it can't be your [only] strategy."
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