"Our Franchisees Do Better in Recessions," Said the Franchisor's Marketing Executive

Many franchisors claim that their business models do better during a recession. Historically this may be a half-truth, but in the current recession, I very much doubt they are breaking any speed records or that their franchised outlets are actually doing better than they were at the top of the market before the global economic subprime meltdown.

This does not mean that the franchisees are not doing well, or are doing worse than their small business independently owned counterparts, as it is true that most franchised outlets do perform other small businesses during recessions. This is due to the fact that franchising companies generally have superior marketing abilities, stronger brand names, and better use of economies of scale.

So whereas, the franchisees are doing better than the competition they are not necessarily doing better than they would have done had there been no recession, or better than they did before the recession occurred. I would be a little weary of national franchise chains claiming that all of their franchisees do better during recessions, as that to me seems a little over the top in their marketing to attract new franchise owners.

In that case, I would ask them why they are pushing the envelope and borderline misrepresentation in their marketing. If a franchisor is willing to do that, or has to resort to that type of selling, then maybe there is a reason people are not buying their franchises. To me that sends up a lot of red flags. This is why I recommend when I see such statements; I tell the franchisees buyer to scrutinize the potential franchise offer extremely carefully. And perhaps even goes so far as to get it in writing, or prove it.

Lance_Winslow

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