Thoughts from Jack Eberenz
The U.S. Labor Department reports that unincorporated self-employed workers have risen by 500,000 since the start of the pandemic. Workers are seeking flexibility and employees are discovering their inner entrepreneur according to the WSJ. What an opportunity for franchisors, a proper message appealing to these entrepreneurial minded people can show the way to owning their own business and reducing risk.
Labor Department data shows that a record 4.4 million resigned from their job in September of 2021, showing the general desire to be in more control over their lives and priorities. While a significant number of these 500,000 added to the self-employed market may be those who do not want employees or just want to work alone that still leaves hundreds of thousands who might make good franchisees.
Already we are seeing the impact, in 2021 franchising’s contribution to the U.S. continued to grow:*
- 16 million jobs
- 2021 projected payroll $780 billion.
- 7.4% of GDP
With this strength in the growth of franchising the New Year brings on the strategic question of whether to grow a concept by franchising or by company owned units? There are many factors involved including the capital required to open units, management’s abilities, need for rapid market penetration, ability to teach the system, profitability, etc. So it’s probably a good idea to get the opinion of an expert, thankfully that has kept me in this business for over 40 years. Here are some of the things I consider to gauge the potential of a start up franchise:
- At least one and preferably several or many company owned stores that are successful.
- Then we measure the ROI after royalties.
- Is the business teachable?
- Do they have a registered trademark and have they protected other intellectual property rights.
- Does management have the right mind set to lead franchisees, not boss them?
- Is there sufficient capital to not only set up the franchise system with legal and business requirements but will there be capital to launch the hunt for franchisees?
What are the advantages of using franchising?
- Rapid market penetration.
- The franchisees supply most of the capital for growth.
- The franchisee become management with “skin in the game”.
- You build a community of like-minded people that can provide collaborative excellence to propel the whole system to new and greater heights.
- Reduced risk because of the proven business systems.
This mini overview is just to remind you that franchising is real, continuing to grow and worth protecting.
*Statistics were taken from multiple sources including U.S. Labor Department, FranData, the IFA and other industry sources. Jack Eberenz is a franchise consultant and advisor. Can be reach at jack@franway.com
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Kevin Palmer Scottsdale ADD TO WISHLIST Paperback $17.95 $16.51
Kevin Palmer Arizona https://www.smainstitute.com/journalism.html
Kevin Palmer http://KevinjPalmerAuthor.com
Kevin Palmer has spent 32 years in the securities industry and was most recently registered with First Allied Securities in Scottsdale, Arizona (2008-2018). Previous registrations include First Montauk in Scottsdale, Arizona (2001-2008); Merrill Lynch in New York, New York (1994-2001); and PaineWebber in Weehawken, New Jersey (1985-1994). http://KevinJPalmer.com