The Fiscal Cliff and Franchise Sales in the U.S.

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The Riddiough Group Launches Program to Stimulate Sales in 2013

Franchise companies that do the homework and implement our five elements in a franchise development program will avoid their own "fiscal cliff."

The Riddiough Group (TRG) has launched a multi-faceted franchise marketing and sales program to help franchisors sell franchises throughout 2013 and beyond, whether the fiscal cliff is real or imagined.

Dr. Michael (Mick) Riddiough, President of The Riddiough Group, explains, “Franchise companies that do the homework and implement our five elements in a franchise development program will avoid their own ‘fiscal cliff’.”

The FIVE key elements of TRG’s Fiscal Cliff Remedies program include:

1.    Creating multi-faceted, highly targeted, online and mobile marketing programs to attract qualified candidates before entering the national pool of franchise candidates.
2.    Aiming marketing programs towards individuals who replicate a franchise’s best owner.
3.    Increasing a company’s franchise marketing budget (average for 2011 was $194,000).
4.    Recruiting and training a wholly effective and affordable franchise sales team.
5.    Improving the profitability of a current franchisee to improve validation.
6.    Introducing new and innovative cross-platform sales and marketing programs.

The Riddiough Group’s new program, Fiscal Cliff Remedies, addresses each of these six steps to success. Today’s franchise owners have to invest heartily in the one component of a company that can make a real difference in its future: franchise sales.

Without question, the 2013 economic environment within the U.S. creates an unpredictable future for franchise growth. Those companies who adjust their marketing plans and sales operations based on shifts in the economy will win. Those who continue to do business as usual will lose.

Historically, a rise in unemployment among middle- to upper-income executives has been followed by a rise in franchise sales. Why? Because many displaced executives decide to become entrepreneurs, get rid of corporate politics and inept bosses forever, and create their own destiny!

For the past few years, however, these displaced executives have NOT deluged the franchise industry with qualified franchise candidates. Why? Because, they lost access to their two primary lending sources:

1.    Private banks stopped making home equity loans for business start-ups, and
2.    The Small Business Administration (SBA) became very difficult to work with.

Those potential candidates who had/have retirement funds (401K’s, IRA’s, etc.) were too nervous to dip into their nest eggs to fund their own new business start-ups. They decided to wait it out and see if the economy would turn around. Secretly, many were hoping to find new jobs again.

Because of the economy and this financial reluctance, there are literally trillions of dollars just sitting in these displaced executives retirement accounts, adding zero growth to their owners’ net worth or to the nation’s economy.

SIGNS THAT THINGS MAY BE CHANGING

Today, however, franchise inquiries seem to be rising again. Why? Several reasons:

1.    The job market for executives obviously has NOT opened back up again, and realism is dominating many former executives’ vision, i.e., “I am never going to regain the high-paying job I used to have.”
2.    Several former executives realize that if they don’t do something, they will outlive their money.
3.    Social security, combined with the shrunken balance of their retirement accounts, is not going to finance the balance of these executives’ lives.
4.    The real estate market is most likely not going to bring them new fortunes.
5.    The stock market has been flat for years and shows no hope of improving.
6.    World markets are more troubled than ever.
7.    We hear more frequently, “I HAVE to do something!”

Faced with minimal job opportunities, shrinking retirement funds, economic “dis-ease” at home and abroad, longer life spans, and no-growth real estate markets, many of these executives are moving off the side lines and peeking under the franchise tent to see what opportunities may lay ahead for them.

DIPPING INTO RETIREMENT ACCOUNTS

While displaced executives once held on tightly to their 401K’s, IRS’s, and other retirement account funds, today, many of these executives are using retirement funds to finance “the rest of their life”. The Federal Government helps this practice through programs such as self-directed 401K roll overs. These types of programs have been available for many years, and today, that use is rising notably. There are now several financing/lending firms that offer assistance to help candidates access retirement funds without penalties, payments, tax implications, etc.

PRIVATE EQUITY, FRIENDS, RELATIVES, and OTHERS

In addition, the private equity industry has increased its funding for new franchised business start-ups. More “Angel Investors” are popping up to help, wealthy individuals are forming “private lending groups”, hedge funds are experimenting with investments in franchised businesses, and family members are helping out more and more.

THE FISCAL CLIFF AND FRANCHISES

Regardless of what TV, radio, and Internet economic analysts might say about some form of the fiscal cliff, more and more displaced corporate executives are creating a new financial landscape by introducing creative solutions and taking risks to secure a positive financial future by buying franchises again. The franchise industry is not a robust market yet, but early signs of recovery demonstrate a rising level of courage among potential franchisees to invest in the future and select franchised business.

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Dr. Michael (Mick) Riddiough
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