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Are you facing life after layoff and looking for your next move? Over the past two decades, the hiring of ex-corporate executives as new franchisees has skyrocketed. As corporate layoffs become commonplace, franchisors have found a treasure trove of potential franchisees with extensive management experience. Many ex-executives also have significant capital available due to severance packages they’ve received or from their years of earning high salaries.
What to expect
For an ex-executive, there are aspects of being a franchisee you’ll need to take note of when planning your life after layoff. For one, in a franchise operation, you won’t necessarily have a large budget or deep bench of personnel on site to support you. You’ll need to make decisions much more rapidly and almost always without having complete information at your disposal. The risks of making a mistake may be much smaller in a financial sense, but they’re also far more personal, since it will be your own treasure at stake.
It’s essential to do your due diligence when investigating a franchise opportunity and understand clearly what your role will be as a franchisee in any particular system. Failure to do so could put your future as a content and successful franchisee at risk.
Standard franchise businesses
Your first decision in transitioning from corporate employee to franchisee will be whether to pursue a “standard” vs. “executive” franchise business. Both can be great, but they’re quite different in terms of the role you’ll play.
In a standard franchise business, you’ll be very involved in the daily operation of the unit. You can expect to spend a significant amount of time working at the physical location of the business and trying to increase business through marketing or sales. You’ll play a hands-on role. And you’ll probably work harder than you have in quite some time, especially during the first few years.
If you’re a former executive who’s tired of the bureaucracy and decision levels involved in a large company, a standard franchise can be quite exciting and rewarding. You’ll be able to control and drive the business and make decisions on every level. You’ll interact directly with your customers. The potential downside is that in addition to being the CEO, you’ll at times wear almost every other hat, from the janitor on up. Expect to get your hands dirty in this type of franchise.
Executive franchise businesses
In an executive franchise, you will have little interaction with customers, if any. In this type of franchise, you’ll hire a manager or other key employees to run the day-to-day business while you play a supervisory role and take on bigger-picture strategy and decisions.
Your role as owner of an executive franchise business will resemble the role you’re familiar with as a former executive. The downside is that if your subordinates don’t perform well, their failures will directly impact your bottom line. Ultimately, the buck stops with you.
Other factors to consider
Here are additional factors to consider when making your decision:
Employees. Some franchise businesses involve the hiring of a large number of minimum-wage employees. Others require fewer or more highly skilled employees. When assessing franchise opportunities, take into account the type of employee you can most effectively manage and work with.
Hours. Consider the high-volume times for the business, as you’ll likely need to be involved during those hours. For example, many retail franchise businesses do most of their volume during the evenings and weekends. If you’re accustomed to having your evenings and weekends free, this may be a big adjustment.
Operating margins. Starting any new business is going to involve making some mistakes and some businesses have a wider margin. Many of these franchises are in the service or sales sectors, though you can also find such opportunities in retail or food if you research carefully.
If you’re a displaced executive, the franchise industry represents a potentially great opportunity for your life after layoff. Be sure to determine what you want from a business and gather all the information you need to ensure the franchise you buy is the right one for you. An experienced FranChoice consultant can help you sort through the overwhelming number of opportunities in franchising.Read More
If you’re relatively risk-averse and contemplating buying a franchise, you may want to look for a recession-resistant franchise. Although the U.S. is currently in the midst of the longest economic expansion in our history, experts say there are warning signs that the next recession may be on its way. Though no business is 100% recession-proof, it’s a wise move to look for a franchise that produces good results even in bad market conditions. Here are some examples:
Necessity vs. Luxury
When looking for a recession-resistant franchise, look at businesses that provides a necessary product or service. Consider, as an example, a hair salon. Regardless of the state of the economy, hair grows and most people like to keep theirs to a particular length. Thus, the demand for haircuts usually survives a downturn. Tax preparation services are another example of recession-resistant services. We all need to file a tax return each year, and many people find the process too complicated to do themselves. Lastly, child care is a necessary service in all economic conditions. Quality providers frequently operate at near-capacity in all market conditions.
Lower price tag
Most consumers decrease their spending patterns during a downturn. For this reason, lower-priced and fast-food restaurants will often thrive at the expense of more upscale, expensive establishments. Decreased spending patterns also benefit companies that sell discounted or used items (such as clothes, sports equipment, etc.) as an alternative to buying new items from a full-priced retailer.
Services paid for by insurance companies
Businesses that provide services that are covered or reimbursable by insurance frequently survive a recession. For example, when a pipe bursts and floods your basement, you’ll search for professional services to restore your space. If your car is damaged in an accident, you’ll want it fixed. In both cases, insurance will likely pay for at least part of the cost of these services. And for that reason, demand for such services will usually continue through a downturn.
Rapidly growing demand
Demographic or other trends can increase demand for particular services. Businesses providing such services often do very well even in tough times. Take, for example, the senior care industry. As Baby Boomers age, senior-care franchises seem to be growing in number and doing very well. Outplacement agencies for people who have been downsized are also expanding from growing demand.
The great escape
Businesses that offer entertainment or another “escape” from the daily grind may do well in grim times. Examples include movies, game/sport arcades, treats, or other indulgences. On the flip side, however, decreased consumer spending can affect these categories. Be sure to consider past and present industry fluctuations before making an investment decision.
Child- and pet-related services
In good times and bad, people spend money providing for cherished members of the family: kids and pets. Child-related franchises include supplemental education/tutoring and enrichment classes for art, music, and sports. In the pet sector, groomers and sellers of boutique accessories will likely flourish even during economic recessions.
There are many other examples of businesses that can thrive through fluctuations in the economy. A FranChoice franchise consultant can steer you in the right direction if you’re looking for a recession-resistant franchise. Our seasoned professionals have an especially good grasp on which industries and companies are faring the best. Their services are free and often save you time by helping you narrow your search.
No matter how you decide to research franchise opportunities, it’s essential to be thorough. Take all the time you need to ensure that you find a franchise that thrives during tough times. Then you’ll be one of the few who are happy with the economy during a recovery period.Read More