Time warp again

Time warp, again?

There is something in the air that tells us we could be revisiting the recessionary times of the late 80s and early 90s! If this is true, how will franchising fair? It actually did quite well the first time round, says Peter Stern, International Franchise Consultant of FranFIND Ltd

At present, according to the latest NatWest/bfa survey, franchising seems to be fearing the worst as a high percentage of franchisors feel that the general economic conditions will become more difficult, not to mention the confidence of the franchisee being its lowest since Labour came to power in 1997.

While there is someway to go before the economic situation reaches that of the last recession, it is worthwhile for those who not involved in franchising back in the late 80s and early 90s to reflect on what happened to franchising then.

At that time I was Head of Franchising for NatWest, with the largest portfolio of franchise financing, so you might imagine that we were just a little concerned ourselves! What actually happened was to prove that franchising can indeed be a safer way of doing business, as very few franchise systems failed and the vast majority of franchisees survived.

Much of the credit should be given to the franchisors as they really worked to support their franchisees during the difficult times, with strong marketing and field support. Also they adopted more stringent recruiting criteria, to reduce the risk of new franchisees failing.

Franchising is well equipped to withstand future economic pressures if we remember those lessons of the past.

Peter Stern is an International Franchise Consultant of FranFIND Ltd. He has been in franchising for 26 years and is still retained by RBS in an international business development role. Peter has also recently received an award for his contribution to 25 consecutive annual IFA Convention.