Franchising and franchise opportunities are still recovering after the recession as reflected in the 2011-2012 franchise financing rates. A recent index from International Franchise Association & BoeFly revealed that lending to franchises showed a 3.18% gain between March 2011 and March 2012.
People who want to start a franchise need to know what industries are showing above-average growth.
BoeFly co-president Mike Rozman stated that hospitality and food service industries have been demonstrating growth even with the financial crisis and are expected to grow further in the months to come.
Individuals interested in these industries can choose whether to own a restaurant or a hotel, whichever suits them.
Street Directory noted that entrepreneurial spirit and the willingness to stay within the restrictions of the established business model are needed to have a successful franchise in food service.
Some of the business-minded people will appreciate the franchise restrictions and utilize them to help their franchise business however others may not like the idea of following someone else’s regulations. After all, most people choose to open or run a business to be their own boss.
Some individuals are attracted to the food service industry and dream of creating unique menus and cultivating an ultimate diner ambience. Franchising is less likely to be suited for these individuals since it follows a standard model and leaves no room for personal creativity. Street Directory stated that buying a franchise means entering an established business with proven record of success. Franchisees have the responsibility to run the enterprise as effectively as possible while adhering to its guidelines and regulations.
According to the Hotel News Resource statistics, less than 40% of US hotels were brand-name enterprise 20 years ago. Currently, around 80% of the US hotels are either branded or brand-affiliated.
The franchise financing growth observed in the food service and hospitality industries suggests that the trend is expected to continue. Robert E. Braun, hotel lawyer of JMBM Global Hospitality Group indicated that there are cases when hotel franchisors help in the funding of a project by providing credit enhancements or loans. Franchisors are more likely to get their money back however this is not the case with franchise financing acquired from other venues, which puts the franchisee and the franchise more at risk.
It is important to do a thorough research on the various hotel franchising options before planning to buy a business franchise to avoid committing major mistakes.
When it comes to franchise lending, the year has been practically static. Individuals interested in starting a franchise in the hospitality and food service industries will be glad to know that the industries have been experiencing above average credit access levels. As an entrepreneur, try to research more on these sectors to avoid quitting halfway just because you felt that you weren’t suitable for such franchise after all.