Multi-Unit Strategies – Be Prepared for Opportunities

Though the U.S. economy has been under the longest expansion period in history, there will come a point where growth slows, and yes, even a recession will return.

Such an economic downturn will undoubtedly affect the more than 759,000 franchise businesses contributing $451 billion to the U.S. GDP. While many franchise leaders are taking a cautious approach toward the upcoming economic cycle, there are things franchisees can do to better position their business for such a downturn.

Investment banker Carty Davis recently wrote about what franchisees can do now to prepare for a turn in the economy. Here’s what he says about how having strong financials can allow franchisees to take advantage of opportunities during an economic downturn.

• Look for growth opportunities. For franchisees with modest debt and strong liquidity, an economic downturn can be an opportune time to expand their business by acquiring assets and markets, as they have the advantage of being able to move quickly. They should look for expansion opportunities in desirable markets that may have been too expensive or unavailable previously. Business closures also can provide conversion opportunities. Franchisees who work with their franchisors early on can find closure and new build opportunities before others do.
• While there may or may not be an economic downturn in 2020, there’s no question that, if a downturn does come, it is beneficial for every franchise business to start preparing now.