Franchisors Seek Ways To Weather The Economy

Arizona Republic:

Co-signing loan papers, buying out operating contracts and modifying licensing fees are among the aggressive steps some franchisors are taking to help their franchisees weather the chilly economy.

Just like small, independent business owners, many franchisees have struggled amid a lingering credit crunch and weak consumer spending.

Their survival is important.

Nationally, franchises accounted for 11 million jobs, or 8.1 percent of the private workforce, and produced $880.9 billion in goods and services in 2005, according to the most recent data available from the Washington, D.C.-based International Franchise Association.

In 2005 in Arizona, franchised businesses employed 262,812 people and produced $21.4 million worth of goods and services.

Franchisors, who license the right to operate businesses in their names, have a vested interest in continuing to attract new franchise buyers and help their existing store operators survive.

Fewer franchises mean less licensing- and royalty-fee revenue, which franchisors depend on to survive.

A rash of store closures also can mar a franchise’s brand.

Read more.

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