Franchising Magazine USA April 2024

Thinking about franchise ownership? here are four factors to consider…

We’re witnessing historically low unemployment and wages that continue to rise. Inflation, seemingly out of control just a year ago, has contracted significantly and consumer confidence reached a twoyear high just as 2024 began. Launching a business during a healthy economy is obviously the preferred route, but here are four key factors to consider if you’re thinking about franchise ownership in 2024.

We’re witnessing historically low unemployment and wages that continue to rise. Inflation, seemingly out of control just a year ago, has contracted significantly and consumer confidence reached a twoyear high just as 2024 began. Launching a business during a healthy economy is obviously the preferred route, but here are four key factors to consider if you’re thinking about franchise ownership in 2024.

1 interest Rates

It’s expected that interest rates will continue to stabilize even more than last year. And when that occurs, we should see a whole lot more money coming off of the sidelines, so to speak. In addition to banks and other lending institutions loosening up the purse strings, this capital spending should extend to the investor class. As for the franchising industry, we’re somewhere north of 800,000 established

For the franchising industry, interest rates remain a primary area of concern because Small Business Administration-backed (SBA) loan programs are utilized to fund countless franchise opportunities in times of lower interest rates. For more than a decade, through the first quarter of 2023, interest rates were hovering at rock bottom

2 Franchise industries that show the Most Promise

It’s expected that industries with safe, resilient, and recession-resistant business models will continue to flourish in 2024. This includes franchise opportunities in categories such as health and wellness, education, restoration and remediation, and staffing. Another standout performer that should continue robust growth is the home improvement industry. This business category took off during the early days of the pandemic (thanks to plenty of unspent capital and nothing better to do) and has yet to slow down. Interestingly enough, one of the key factors boosting growth in home improvement is the technology that brands are pouring into their field operations. Even franchisees with zero home improvement or sales experience can succeed, thanks to the development of proprietary apps and tablet-based software platforms that handle every aspect of appointment setting, sales, and customer service. Because the training offered to new franchisees is so thorough, it allows many of these new owners to work on the business – as opposed to in it.

3 What Factor Will the 2024 Presidential election Play?

If what we’re expecting with the next presidential election does come to pass, it may cause a lot of first-time business owners to proceed with extra caution. The uncertainty factor has a way of penalizing progress, so many entrepreneurs may choose to delay their plans until Q4 –once everything is (hopefully) settled. That being said, experience tells us that there’s really never a perfect time to take the proverbial leap of faith into business ownership. In general, people are more than capable of putting their entrepreneurial plans on hold indefinitely, always waiting for just the right moment to proceed. But a word of caution – if you sit around waiting for that perfect moment of inspiration to launch a business of your own, it might not ever arrive.

4 commercial Real e state –a generational tale

It will be interesting to watch the commercial real estate space, because so

many franchise opportunities and small businesses rely on establishing a brick-andmortar storefront in high traffic areas. But these days, the current commercial real estate market is functioning like a Tale of Two Cities. In your larger commercial real estate markets like Chicago and Portland, where crime rates have risen in recent years, there’s a lot of vacancies –especially for retail and office space. But when you move down the ladder a bit to mid-sized areas like Omaha, Des Moines, and Lincoln, there’s simply not as much vacancy. This may drive additional interest in franchises that are home or mobilebased, most of which come in at a lower initial investment level. This is in contrast to those with a more traditional franchise investment mindset who perceive value and safety in brick-and-mortar businesses. Moreover, that traditional thinking means setting up shop on Main Street USA. Interestingly enough, the younger generation - such as Millennials – often believe the opposite. Thanks to a desire to avoid being tied to a physical plant and associated fixed lease payment, along with the reality of higher interest rates and other financial barriers to entry, this new breed of entrepreneurs are more likely to stick with franchise opportunities that are either home or mobile-based.

Overall, what keeps a good deal of wouldbe franchise owners on the sidelines is the antiquated way they still view their careers - especially if they didn’t grow up around entrepreneurs. They’ve been conditioned from a young age that what work means is working for someone else. They simply have to get and maintain a good-paying job, for stability’s sake. There may still be plenty of pent up demand to go out, plant your flag, and open a business of your own. But the truth is that most of the would-be entrepreneurs who fail to pull the trigger and act on their dreams are almost always their own worst enemy. If you truly want to explore an entrepreneurial future with more freedom and flexibility, it still takes both decisiveness and a firm commitment to accept the risk that comes with franchise ownership. v

Blake Martin owns FranNet of The Heartland, a franchise brokerage, sales, and consulting firm that provides coaching and consultation for entrepreneurs and small business owners. He’s a Certified Franchise Executive (CFE) and a graduate of the University of Michigan’s Psychology Program. During his two decades in the franchising industry, Blake has provided practical advice in building franchise systems from the ground up, while helping hundreds of entrepreneurial clients become small business owners.

he can be reached at bmartin@frannet.com.