Workers Take Surprising Route Out Of Down Economy

Franchise Wire:

With job-cut announcements becoming an all-too-frequent part of today’s business climate, corporate refugees and those who are tired of ‘waiting to be next’ are finding harbor in an unexpected place-franchise small business ownership.

‘The economic conditions have created a ‘perfect storm’ for downsized executives to consider franchising,’ says franchise expert Julie Bennett, author of ‘The Franchise Times Guide to Selecting, Buying & Owning a Franchise‘ (Sterling Publishing, 2007). ‘Good jobs are getting scarce,’ Bennett says. ‘According to the U.S. Department of Labor, corporate payrolls shrank by 63,000 jobs in February. And 2 out of every 3 corporations are either considering or have instituted hiring freezes.’

Interest in franchised businesses rose during the last recession, Bennett says, because corporate refugees had sizeable severance packages to invest. This year, severance pay may be smaller, but it’s gotten easier to invest your IRA or 401(k) monies into your own business venture. ‘But that doesn’t mean every downsized executive should use his or her retirement funds to open a franchise,’ she warns.

‘When doing research for the book,’ Bennett says, ‘I learned it’s not the loss of income that bothers most corporate executives who became franchisees; it’s the loss of their support staff. You have to roll up your sleeves and do things you’ve never done before, like fixing the office computer and disciplining that employee who comes in late every day. If you can’t see yourself answering the phone or driving the delivery truck, don’t consider franchising. Try to live off your savings until the next round of corporate hiring.’