Higher employment and the recession have slowed existing home sales and have also spurred the surge of franchises especially in the service sector, which deals on fixing things.
From the Main St. to Wall St., recession-proof property owners and businesses needing skilled workers to construct saleable buildings have been benefitting from laid-off employees looking for job security.
Marketing and operations VP of Texas-based company The Dwyer Group, Doug Dixon stated that the new franchisees will probably increase between 25-30% in the current year compared to last year.
Dwyer, with 1,500 franchises scattered in 10 countries and 16 in the Massachusetts area earned a total of $77.5 million revenues in the previous year. The company operates 7 franchise types – 4 in the area of Central Massachusetts, 2 Mr. Rooters, 1 Mr. Appliance, and 1 Mr. Electric. Purchased by private equity corporations led by New York-based TZP Group LLC in 2010, its estimated value is $150 million.
The third quarter report of the International Franchise Association showed that the U.S. is home to 736,114 franchises, which employ over 8 million individuals. The association indicated that the current year will see a rise in the number of franchise opportunities at approximately 1.5%, following last year’s decline. Employment will then increase by 2.1%.
The Forbes magazine listed the 10 fast-growing franchises during recession and the list included McDonald’s, Dunkin’ Donuts, Subway, and Liberty Tax Service among others.
Kyle Ritchie from Worcester is the general manager of Mr. Rooter and Mr. Electric, two franchises owned by Dwyer. The president is Stephen Ritchie, a plumber, and Kyle’s father. They purchased the Mr. Rooter franchise last 2002. Last year, they purchase the Mr. Electric franchise to widen their services.
Layoffs triggered the Dwyer growth with many of the unemployed individuals choosing to start franchises rather than looking for new employment and experiencing another layoff.
According to Mr. Dixon, home service franchise opportunities were unaffected by the recession. There are many franchises available however home repairs still rank higher than retailing businesses related to purchases.
The list of Dwyer franchisees include electricians, landscapers, and plumbers who prefer a business of their own or do not enjoy working alone.
After doing demographic studies on the number of dwellings occupied by owners and the number of veterans, Dwyer has Worcester as the location with the vital growth. Mr. Dixon stated that unlike in retailing businesses, house ownership is essential in the service industry because renters do not usually concern themselves with getting things fixed. Worcester’s home ownership is above average.
Mr. Dixon indicated that veterans make ideal franchisees.
He stated that franchises and veterans go well as people who used to be in the service are into following rules, processes, and procedures, similar to an ideal franchisee. Franchisees who know how to follow the processes are more likely to do well.
Franchisees receive tailored support in various areas including finances, management, marketing, and technology. Mr. Dixon mentioned that franchise businesses experience higher success rate compared to independent stores as revealed by a number of studies.
Franchisees however are required to pay revenues to franchisers.
According to Mr. Dixon, individuals need to weigh the difference in cost between starting independent store versus getting such support from franchisers. He stated that as franchiser, Dwyer continues to exhibit growth, which helps in selling franchises.
Aside from providing cost-related support, Dwyer also provides other services like brand name recognition, call center, social media access, and demographic analyses.