If Franchising Is Your Backup Plan, Go With Your Other Plan! 

August 22, 2009 3:29 pm Published by 4 Comments

franchise_hot_backupI’m afraid the remnants of the recession and sustained unemployment will lead people down a path that justifies choosing franchising as a backup plan. It’s happened before in franchise history, particularly following recessions, and it may happen to this subscriber and many others like him. Without revealing his name, here’s what he wrote:

“I am between careers. I was laid off in January from a 27 year engineering career. I’m trying to juggle two possibilities at one time . . .” (1) interviewing for jobs “when they do come up” and (2) looking at franchise opportunities.

Franchising as the backup plan

“I am continuing to research franchises as, frankly, a backup plan. . . I’d definitely like to get your opinion . . . .” He went on to say that he’d like my opinion once he “identifies that franchising is the right path” for him and when he’s ready to look at specific opportunities.

He concluded, “I’m currently working with a local office of (a franchise broker).”

My take on this

The saving grace is that the subscriber acknowledged that he has to determine that franchising is the right path for him. I trust he’ll do that before he invests in a franchise.

But if he doesn’t find a job in another 90 days, or more, it may be easy for him to make the decision to go with his “backup plan.” Suddenly, he’ll decide (perhaps with some outside pressure, i.e. a spouse, a broker, hungry children, friends, etc.) that franchising is for him. Forget that it was once a “backup plan” — it’s now the plan because, seemingly, there’s no other option.

It’s probably a mistake

And I think that will be a mistake.

If your “backup plan” is franchising, that’s probably not going to work. If it’s not your passion to own a business, it’s not going to work. It’s too difficult to own a business. There are so many decisions, challenges, transitions, pitfalls — if it’s not your passion to tackle these issues head on, don’t do it.

Bottom line: Franchising never makes a good “backup plan.”

Franchise misfits

Unfortunately, we’re likely to see a lot of misfits in franchising as a result of the current economic crisis. People have their backs to the wall financially. When their unemployment runs out and they’ve used up their savings — what are they to do?

Lots of folks who have a vested interest will tell them to “Buy a franchise!”

That spells disaster for them and for franchising. It won’t help franchising when these reluctant buyers, who never really wanted to own a franchise, fail and return to corporate America in a couple of years when jobs are again plentiful. The aftermath of failures and disappointments will further damage franchising’s reputation.

I could be wrong. Hope I’m wrong. But history tends to repeat itself!

Photo image by: cesarastudillo

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This post was written by Dr. John Hayes


  • Great point. I would add to bring someone else with you if you get as far as Discovery day. When the backup plan becomes “the plan” you esily may be seeing the franchise through rose-colored glasses. If they tell you it may be a year before you’re profitable- hear them instead of thinking, I’ll do it quicker.

  • Ray Foulkes says:

    A very interesting analysis, and one that makes perfect sense.

    As a potential franchisor, I am very wary of taking on the wrong franchisees, and having read this will be even more wary. It is hard to say no to people who want to have a go, but it is better to say no up front than allow someone to go down the wrong path, even if it means throwing out a couple of good franchisees together with the wrong ones.


  • Joel Libava says:

    Fantastic job on this article. So true. You know that I am a franchise broker/consultant. I won’t work with anyone who is looking at something as big as small business/franchise ownership as a Plan B.

    Good stuff.

    The Franchise king
    Joel Libava

  • I agree, John. Most tenderfoot entrepreneurs — including some veteran business players — tend to look at franchising as the second, “this-will-get-us-of-trouble-so-let-us-franchise” option.

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