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With few job opportunities, people are looking at starting up franchises. In fact, I recently talked to someone who said that the upcoming Franchise Expo conference has seen a doubling of registrations.But according to the Wall Street Journal [a paid publication], there are signs that the credit crunch is taking a toll on franchises.
After all, the upfront costs for a franchise can be significant. Moreover, there are the expenses for upkeep and maintenance.
Some of the franchises that are looking to pull back on expansion include major operators like Sonic Corp. (NASDAQ: SONC), Panera Bread (NASDAQ: PNRA) and so on as different finance firms such as GE's (NYSE: GE) capital arm and Bank of America (NYSE: BAC) are showing some restraint and putting a squeeze on financing.
Basically, until the capital markets stabilize and credit gets back to normal, it can be tough times for those who want to jump into the franchise game.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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