At a franchise convention I attended in Quebec in May, I spoke to a colleague who practices franchise law in the United States. It’s very normal for Canadian franchise lawyers to attend franchise conventions in the U.S., but it’s not that usual to see American franchise lawyers attending one up here.
I was curious as to why he was participating in a conference north of the border, and we ended up having a long talk about the franchise landscape in the U.S.
The U.S., he said, was “overbuilt†with franchises. And the financial crisis/recession that started in 2008, changed the industry in the U.S. Existing franchisees were having problems making money because consumers weren’t spending as much on discretionary items as they used to. Many franchise systems were losing franchisees (and locations) to the recession. Other franchisors were having trouble selling franchises because Americans couldn’t easily borrow on the equity of their homes to finance a franchise acquisition anymore (there being no equity in the home to borrow on, or no home). Some franchisors were even declaring bankruptcy. Full post.
