In past recessions, entrepreneurs could — and often would — turn to tried-and-true franchise concepts to jump-start their dreams, but the tightening of the credit markets has slowed the pace of new franchisee startups and thinned the herds of some established franchisers.
“Historically, franchising as a business model has been extremely resilient to economic slowdowns, which has helped spur the pace of economic recovery,†said Matthew Shay, president and CEO of the International Franchising Association, in a recent press release. “However, the credit crunch is constraining this potential growth and slowing economic recovery.â€
According to PricewaterhouseCoopers LLP’s Franchise Business Economic Outlook for 2009, in the years following the burst of the dot-com bubble in 2000, the number of franchisees increased on average by 5.6 percent per year through 2005.
