Economic uncertainty or no, franchising remains an exciting option for those who want to test the entrepreneurial waters. In fact, now may be an uncommonly good time to explore franchising opportunities, according to Tom Portesy, president of MFV Expositions.
"I've been in this business 20-some years, and I've never experienced an economic environment that is more picture-perfect for franchise development," says Mr. Portesy, whose company organizes the International Franchise Expo, an annual industry trade show.
Economic downturns tend to pique interest in franchising, particularly among people who have lost their jobs. The current climate is unique, however, by virtue of its historically low interest rates and high home values. The latter is significant because many people fund franchising startups by borrowing against their home equity, notes Mr. Portesy.
The International Franchise Association estimates that each year upwards of 20,000 new franchisees open their doors for the first time. Moreover, the industry continues to expand beyond the stereotypical fast-food model. The nation's franchisors represent scores of industries, and most operate small-business systems.
Such systems present excellent opportunities for individuals who don't have significant capital to fund a franchising venture. Numerous franchising operations require an initial investment of less than $50,000, according to Mr. Portesy.
"Most people don't have a clue about how big the franchising industry is," says Howard Bassuk, founder, president, and chairman of the board of The Franchise Network Group, a franchising consultancy.
Mr. Bassuk and many analysts agree that Hispanics and other minorities are well positioned to take advantage of the industry's increasing emphasis on underserved communities.
"Latinos are now being viewed as one of the franchise sector's best hopes for long-term growth," says Laura Sonderup, director of Heinrich Hispanidad, a Denver-based adver-tising agency.
As a result, the franchising industry is reaching out to Hispanic entrepreneurs with special financing programs and other incentives. Aaron's Sales & Lease, for example, is aggressively recruiting Hispanics in Florida in part by offering unique financing packages through the Small Business Administration and lending institutions.
The National Minority Franchising Initiative (www.minorityfranchising.com) produces a guide that includes information on more than 590 companies with minority outreach programs.
The guide also includes an overview of articles on minority franchising and resources available to prospective franchisees.
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