Editor’s note: This article was first published in January 2011; it was written in the middle of the economic crisis in Spain, and its forecasts for 2011, such as new franchises and growth of established chains, are now long past.
According to a recent study, most franchises managed to end 2010 in the black, which makes them businesses whose model has stayed profitable. It’s true that the typical franchisee today needs an ever larger investment to get into the world of franchising, but we can also see franchisors offering more and more flexibility when it comes to paying the upfront franchise fee and royalties.
Although I’m not a fan of franchising as a way to have your own business, I have to admit that, judging by the numbers, it’s a great option for an entrepreneur who isn’t sure what kind of business to start.
One of the biggest advantages a franchisee has is joining a business system that already works, with a marketing and advertising strategy that makes the business’s name known nationwide. That undeniably gives it an excellent image advantage over its local competitors.
Meanwhile, as many companies cut staff, franchises are becoming a small-scale engine of job creation, and franchisors keep investing more in new outlets, which gives new franchisees a chance.
The franchise system has proven so successful that many companies are now turning to it to gain a presence in other provinces of the country. So in 2011, even as we head into the eye of the storm of the crisis, we’ll see new franchises and significant growth among the established ones.
This will also increase demand for consultants who specialize in franchising businesses to make them more profitable.
The franchises growing fastest in revenue and innovation are still those focused on fitness, beauty and personal care, photo-epilation (light-based hair removal), new technologies and second-hand buying and selling. None of them requires a large investment, and the money can be recovered in less than 18 months.
Further reading
- Advantages and disadvantages of a franchise
- Start a business or buy one?
- The most profitable businesses of 2011–2012
Featured image: Sebrae-SP, Public domain, via Flickr.
