Is a bad economy a good time to invest in a franchise?

It’s understandable that with all the negativity about the global economy and increased difficulty in getting finance, that one would feel concerned about making a large investment in franchising.

Franchises though have fared better than independent small businesses though, mainly because of the support that head office is able to provide its franchisees and the fact that franchises operate on a replicable model, meaning many of the challenges and kinks have been worked out before you even open for business. On the plus side, while it’s more challenging to secure finance, lowered interest rates make it cheaper than ever to pay back a loan.

Having said that, very careful research into both the brand you’re interested in and the sector in which it operates is essential. Don’t invest in beehives when there are no bees. Also important is to establish whether the brand’s success is a result of fads. They don’t last.

Tracy Lee Nicol
About the Author
Tracy-Lee Nicol is the managing editor of Franchise Zone Magazine and deputy editor of Entrepreneur Magazine. She studied her Masters degree in Art History and Visual Culture at Rhodes University and spent the next two years working and travelling in Asia. Her love of people, business and teaching is reflected in telling the stories of entrepreneurs, franchisees and franchisors, inspiring others to take the leap to being their own boss and bringing about positive change in South Africa.

Related Q&As

© Franchise Zone / Entrepreneur Media SA (Pty) Ltd. All rights reserved.

Disclaimer: Reliance on the information this site contains is at your own risk. Readers are advised to consult their attorney and/or financial advisor prior to pursuing any investment. Please read our Editorial Disclaimer and Terms & Conditions of Use.

Is this information out of date or incorrect? Report it to our webmaster.

Leave a Reply