Consumers Using Installment Loans to Fund Franchises
Consumers and franchises
The number of consumers using installment loans to fund their own franchise is steadily increasing. In a market where people are no longer sure of their jobs, many people are venturing into business ownership to build their own futures. For example, Jon McIntoch of Philadelphia found himself laid off for the fifth time in his 30-year career as a banker. Rather than leave his future in the hands of others again, he tapped into his 401(k) and opened his own business that provides home health care to those in need. McIntosh is now one of America’s 1 million, and growing, franchise owners.
Franchises have grown tremendously in the past decade, and have developed new respectability within the job market. Franchised businesses make up 11 percent of the US private-sector economy and receive 41 percent of retail spending. Part of their popularity can be attributed to their simple premise. People can be their own bosses, get the training and support they need, receive financing, and have help with marketing all along the way. In January of 2009 a Franchise Expo was held in Miami and proved that the franchise business is here to stay.
The growth of the franchise
Steve Olson, publisher of Franchise Update Media Group, stated, that “in recessions, the number of franchises has actually grown faster than it has in good times.” Between 2001 and 2005, franchises expanded 18 percent in the U.S. and rose to 900,000.
The business sector has also experienced a change in public perception. In the past, many people equated the word “franchise” with a tacky and unprofessional business. Those ideas are quickly changing. Wayne State professor Timothy Bates stated, “There is absolutely no difference in the success rate or longevity of independent entrepreneurs versus franchises.”
New franchise owners
It’s no wonder the economy has given birth to a new generation of franchise owners. Many people have been burned by the recession with lay-offs, pay decreases and losses of home value. Bates added, “People who have suffered in the economy, which is just about everyone, want to find ways of making themselves immune to future disasters. They want to take their jobs into their own hands, and franchises can be a safe way to venture into being an entrepreneur, but having a firm plan with full support.”
Consumers are looking to venture into franchises more and more. And with the standard franchise fee being anywhere from $5,000 to $50,000, it’s a reasonable aspiration for many. Consumers are using installment loans, family loans or traditional bank loans to handle the cost. The return is priceless because it empowers them to know that they have a say in their future.
Businesses of the future
Many experts insist that businesses of the future will be more self-owned. Trade journalist Olson insists that the “new number of franchises will explode in this recession, provided would-be Subway and U-Haul lot owners can get financing.”
Financing seems to be the biggest deterrent to consumers. Many are determined to make it work, however. As Clifford Brant, new Papa John’s Pizza owner, stated, “I will do whatever it takes. I am not going back to being an employee who can lose his job at a moment’s notice again.”
Even if financing options aren’t easily had, consumers will use installment loans and family help to make their dream of stable employment happen.