Should I Buy a Franchise During the Coronavirus?

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Whenever the time comes to lay out a significant amount of money for a big financial investment, there’s always a level of uncertainty that comes along with it. In the most typical of instances, business owners tread a fine line and face the risk of their investments not paying out in the end, or not being as successful as they had expected. The uncertainty associated with financial investments, particularly related to franchise opportunities, has only amplified amidst the ongoing corona pandemic, making many individuals question whether they should purchase a franchise during the COVID-19 pandemic or not.

As franchise experts, we’re here to provide some recommendations you should keep in mind if you do decide to invest during this time. 

The Uncertainty of Financial Investments

The very nature of financial investments dictates that they’re uncertain, no matter when the investment takes place. And although unemployment numbers are high right now with estimates over 9 million jobs being lost during the COVID-19 pandemic, it’s worth noting that all essential businesses are still open. This means that there’s still a multitude of franchise opportunities up for grabs.

Research Is Everything

Right now, there’s no telling what the future might hold. We suggest that you strive to make the best out of a bad situation. You can do this by simply staying home and researching! Perhaps the smartest move you can make is to formulate several backup plans and explore your options before resting on a final decision.

Once you’ve gained a good understanding of the marketplace, you’re more likely to make economically sound investments. Since there’s no harm in learning about the franchise options available to you, prospective franchisees can prepare ahead of time, and then invest smartly.

We highly recommend that those of you who are already involved in a franchise award process remain in it and continue to educate yourself so you have the knowledge to make the right decision when the situation improves. With that said, judging by the state marketplace at the moment, perhaps the best place to invest is in a franchise that’s recognized as an essential business.

Now Is the Time for Action

In times of economic uncertainty, it’s wise to be cautious. But better than that? Get down to business right away. You’d be surprised to know that the Franchise Brokers Association was founded during the 2008 recession. Why? Well, because we didn’t know any better!

Interestingly enough, though, the funding reserves are high at the moment, which shows some promise in terms of propelling new businesses and generating momentum. That’s not to downplay the fact that the market has, in fact, taken a hit. Instead, it’s just to emphasize that the situation is not as bleak as it might look, and there are still options that you can explore.

For example, portfolio loans are taking an emergence. These are security backed lines of credits where you can use your stock portfolio as collateral and borrow funds against that. 

Additionally, the zero percent interest rate from the FED is encouraging banks to keep lending loans, and this is good news for new ventures and prospective franchisees.

The banks, however, are adopting a more aggressive screening approach that involves performing background checks on the borrowers before they lend any money. So when you request a loan, you can expect questions about your timing, your landlords, and your business skills and expertise in general.

You Can Still Invest Wisely During the COVID-19 Pandemic 

In the end, we feel it’s our duty to remind you to perform your due diligence and research about the franchise opportunities around you before actually making a big financial investment. Due to the COVID-19 pandemic,  right now the most viable option for those still looking to purchase a franchise is to choose one that’s considered an essential business. 

If you’re interested in learning more about becoming a franchise owner, download our free guide on what you need to know when transitioning from a job to owning a franchise. This will provide clarity around what happens next and help you decide if you’re ready to begin your franchise adventure. If you’re interested in becoming a franchise broker and introducing franchises to potential franchisees, then we highly recommend you check out our franchise broker training program!

FREE RESOURCE

Download “5 Red Flags to Look for When Selecting a Franchise”