In a market where money is tight and people seek the safety of familiarity, franchising offers an island of opportunity for young entrepreneurs hustling to make their money. Small businesses have been particularly hard hit by the recession, with smaller cash reserves and less capital to weather tough times.
Reuters reported Wednesday on the shift some existing businesses are making, as they voluntarily bring themselves under the umbrella of national franchises. In some cases, entrepreneurs see the move as strategic – buy in before you get bought out or killed by competition. If you can’t beat them, join them.
One entrepreneur interviewed by Reuters was Corey Butcher, who started out managing gyms and health clubs at the age of just 23 and bought his own at 26. Last year, he brought the four separate clubs he owned under the Gold’s Gym franchise after the cost of creating his own brand proved "prohibitive."
"The problem was you’re fighting against the dollars of LA Fitness, 24 Hour Fitness and Bally’s," Butcher told the wire service. "We needed some synergy in the corporation. Really the only way of doing that I felt was with a franchise."