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FRANCHISE 2016 REPORT
Dan Magnus (inset) ditched the publishing world
to try his hand at franchising. He now owns two county Elevation Burger locations.
Magnus, 51, says he has “never been happier” since leaving the tu- multuous publishing world and opening his own business. That, in a nutshell, explains the seductive lure of franchising. In our current econo- my, entrepreneurship is increasingly attractive to many who fear losing their jobs through mergers, restruc- turings, and all the other corporate landmines that dot the employment battlefield. Magnus, like many oth- ers, found himself out of work and “had no brilliant idea,” he says, other than deciding that he “didn’t want to spend my life in a business that hadn’t figured out a model yet.” He looked at different options, and someone suggested franchising. “I can’t say I was immediately enam- ored with the idea,” Magnus recalls. “But looking into it, there were a lot of things desirable about it. I fell in ‘like’ with the business. But I fell in love with Elevation Burger.”
Passion like his is helping fuel strong growth in franchising, both around the nation and here in Westchester County. Franchise busi- nesses grew at a faster pace than the rest of the economy—by 5.2 percent franchise GDP to 3.4 percent overall US GDP—according to the mid-2015
forecast update by the International Franchise Association Educational Foundation and IHS Economics, a business analysis and forecasting firm. In fact, franchising is expected to outperform the US economy for the fifth consecutive year and will have contributed $521 billion to the economy in 2015.
Local franchise numbers are harder to come by, but those in the trenches say business is booming here, too. “Unfortunately, most of the hard data that exists is not bro- ken out on a Westchester basis, but we have had more inquires this year [from Westchester] than last year, and more last year than the year before that,” says Frank Dunne, of FranNet, a national company that helps match prospects with franchise opportunities. “We’ve seen franchise businesses open here in massage, cell-phone repair, direct mail and marketing, dental-product repair, residential cleaning, residential and commercial painting, staffing, frozen yogurt and desserts, senior-home- placement advisement, and others,” says Dunne, who also offers semi- nars on franchising through SCORE Westchester. “Franchising is very much alive here.”
David Kaufmann, a senior part- ner in the New York City law firm Kaufmann Gildin & Robbins, who specializes in franchise work, agrees. “We have had very significant growth here in 2015 and will again in 2016,” he says. That optimism is confirmed by the Fall 2015 Bank of America Small Business Owner Report, which finds that small-business owners in the metro-New York area—of which franchisees are a significant por- tion—are quite bullish about 2016, with 70 percent expecting revenues to increase in the year ahead and 57 per- cent confident the local economy will improve in the next year.
Beyond Fast Food
Franchising is far bigger than most people realize and goes well beyond the fast-food joints we typically asso- ciate with the model. There are about 3,100 franchise concepts across more than 90 industries nationwide, Dunne says. “Today, 40 percent of retail sales in the US are made in franchise out- lets,” Kaufmann says. “Every time you buy a car, have it serviced or fill it with gas; virtually every hotel you stay in; most stores in the mall; most lawn-care or pet-care services you use—all of these are predominantly franchised.”
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