October 5, 2010
By Rhonda Sanderson
With the economy inching along, franchising is showing some signs of recovery. According to the Franchise Business Economic Outlook, the number of franchised establishments is expected to increase by 2 percent with 17,801 new units in 2010, employment is expected to increase by 0.4 percent with 36,000 additional jobs and overall output is expected to increase by 2.8 percent with a net gain of $23.6 billion. This estimated increase in franchised jobs and establishments bodes well for investors looking to start a business for themselves.
Franchisors understand, however, that not everyone has deep pockets. That's why many are creating special programs and incentives that will help individuals get steady footing as they begin to build their business in their local community. Franchise expositions are great places to discuss investment options with franchising experts.
Sponsored by the International Franchise Association and taking place November 5-7 at Los Angeles Convention Center, the West Coast Franchise Expo will feature hundreds of exhibitors. There will also be more than 30 information-packed seminars and workshops available—and most are free.
From home improvement to Internet marketing, check out the following brands that are offering stellar incentives during these tough economic times.
Building a brand with a small staff can be challenging. As a result, Plainfield, Ill.-based Spring-Green Lawn Care recently created an Economic Stimulus Package for its franchisees. The company reinvests between $10,000 and $20,000 toward marketing programs for franchisees in their second year. This can be extremely beneficial to new business owners as they build brand awareness in their communities.
Through Spring-Green's Flex Start program, new owners may keep their previous jobs in the beginning stages of their Spring-Green business. Operating the franchise in this part-time capacity offers experience in day-to-day operations. This is a great opportunity to learn the lawn care industry while generating supplementary income.
Discounts and Deals
While some franchisors are reinvesting in their franchisees as a way to stimulate the economy, others are offering discounts towards initial investment costs and royalty fees.
The digital marketing firm WSI, for example, just launched its Investing in America Program—an initiative aimed to give back to the community and help re-build the U.S. economy after the recession. Through this program, WSI will be offering U.S.-based young entrepreneurs and military veterans the opportunity to invest in the franchise for a 50 percent discounted franchisee fee.
WSI has set aside 30 single unit franchises for this program, each available at a discounted franchise fee of $24,700. Young entrepreneurs can qualify for this opportunity if they are under the age of 28, have completed their high school education and can provide proof of said qualifications. Meanwhile, military veterans can qualify by providing valid proof of completing military service.
More than 14 percent of businesses in America are veteran-owned, according to the U.S. Small Business Administration. Veterans know how to be effective leaders, and they know how to thrive in a proven system. This combination makes them unique and desirable franchisees. And with thousands of men and women transitioning out of the armed services every year, several franchises have upped the ante when it comes to attracting vets.
Established after the Gulf War by the late Don Dwyer Sr., founder of The Dwyer Group, the VetFran Program gives U.S. military veterans a discount toward the purchase of a franchise. Today VetFran includes more than 400 franchisors that offer financial incentives to veterans. Most importantly, more than 1,500 veterans now own a franchise through the VetFran program.
One VetFran member is Express Employment Professionals, a staffing company. Express presents new franchise owners the chance to earn money by helping other people grow their careers, and offers a 25 percent reduction in its franchisee fee to military veterans who qualify.
The home repair, restoration and maintenance franchise, Handyman Matters, is also a member of VetFran and recently announced its Military Veterans Program. This program offers a $2,500 discount toward the initial franchisee fee to qualifying owners. Service territories are currently available in all 50 states, with incentives offered through the end of 2010. This discount is also available to minorities.
A free franchise
Some franchisors are even giving away free franchises this year. KidzArt/Art Innovators, a children's art education franchise company, is hoping to ignite more than a few artistic sparks at the WCFE this year, where it will give away three free franchises. As part of a larger national giveaway, attendees can register to win during the show. Of the five winners, KidzArt will announce three at the expo at 1 p.m. on November 7.
When evaluating your best suited financial investment, it's important to consider businesses that won't consume all of your net worth. You want to evaluate your savings to make sure you have enough to get you through the first sixth months of start-up. Many people in today's environment are using 401(k) or retirement funds to get their businesses off the ground because there are fewer penalties and tax distribution costs.
SBA guaranteed loans are also a good way to fund a franchise unit. The SBA has a resource called the Franchise Registry, which is a preapproved listing of franchises. This allows for a more streamlined loan process for potential franchisees.
Starting a business in a slow economy means less competition and more leeway to learn the ins and outs of the job. A slow and steady beginning is a great way to grow a strong rapport in your local community. And as the economy continues to pick up, you'll be ready for the surge in business that comes your way.
Rhonda Sanderson is the founder of Chicago-based Sanderson & Associates, a public relations firm that specializes solely in franchise companies. Sanderson & Associates has handled publicity for hundreds of franchisors and thousands of their franchisees since its inception in 1985.