"I suppose I could have gone out there and gotten another
job, but I knew two to five years down the line, I'd probably
be looking for another one," says Frederic Holdsworth, a
former CFO for a manufacturing company and a current franchisee for
AlphaGraphics.
When the company Holdsworth worked for decided to move its
operations to Malaysia, Holdsworth helped shut down its
Massachusetts base, laying off many workers before being let go
himself this June. With severance package in hand, Holdsworth, 41,
decided not to find another finance position. Instead, he looked
into franchising. This September, he opened the doors to his
Manchester, New Hampshire, printing franchise.
In an uncertain economy, Holdsworth's story is fairly
common. "When people are laid off, they typically try to get
employed by other companies in the same industry, only to find
those [companies] are cutting back as well," says Don Boroian,
president of Olympia Fields, Illinois-based Francorp Inc., a
franchise consulting firm. "After a month or two of sending
out resumes to no avail, they begin looking at business
opportunities and convert their severance pay to capitalization for
a franchise."
Content Continues Below
Dana Hobson had been looking into franchising even before she
was laid off from her job with Time-Life. Wanting to start a
family, Hobson's husband, Linc, a former lobbyist, suggested
the couple move from suburban Washington, DC, back to his hometown
of Peoria Heights, Illinois. "There's not much lobbying to
do in Peoria, so if we wanted to move back there, we knew we would
need to start our own business," explains Hobson, 34.
When the books division Hobson worked for closed down, she and
her husband put their full effort into finding a franchise,
reasoning it would provide more security than just another
corporate job. "The benefit [of franchising] is the ultimate
control over your work and your income," she says.
"Obviously, the benefits of [working for a] company are you
get your paycheck every two weeks and your 401(k), but tomorrow
they can tell you, 'We're laying you off.'"
In 2001, Hobson used her severance package to purchase a Home
Instead Senior Care franchise, a business that provides nonmedical
care to senior citizens. She and her husband operate the franchise
together, a move that gives them the freedom to spend more time
with their 6-month-old baby.
Jeff Huber, vice president of franchise development for Home
Instead, is seeing more people like the Hobsons show interest in
his franchise. "We've noticed a marked increase in
inquiries from people who have a severance package or have been
downsized and are looking into small-business ownership," he
says. "I would say one in five to one in six people who buy a
franchise in our system have a severance package, whereas a year or
so ago it was one in 10 to 15."
According to Huber, these prospective entrepreneurs are looking
for something in franchising they couldn't find in the
corporate world. "They've spent the past 20 or so years
working for kind of a nameless, faceless corporation, and now they
want to control their own destiny," he says.
Holdsworth agrees. Although his shop has only been open since
the end of August, he's already noticed some major advantages
to being self-employed. "If I'm going to work a lot of
horrendous hours and put in a tremendous effort, I'd just as
soon do it for myself as opposed to someone else," he
says.
Don DeBolt, president of the International Franchise
Association, sees other fringe benefits for people looking to
invest their severance in a franchise: "It offers an
opportunity to match your interests and skills with a business that
has already been proved."
Franchising, according to Huber, also offers a wiser investment.
"People who have been downsized or have a severance have the
option to take the money and maybe invest it in the stock market,
but they don't feel like they have control over the stock
market or the factors that affect [it]," he says. "If
they invest it in themselves and their own business, that's
something they feel they have control over. All the sweat equity
they put into the business falls directly to their bottom line and
is building an asset for them."
DeBolt agrees that franchising is "a wonderful way to
diversify a person's investment portfolio, particularly when we
have a stock market that's not too predictable."
Not that owning a franchise is a small undertaking. As
Holdsworth and Hobson have found, being a franchisee requires not
only a sizable financial investment, but a great deal of time and
energy as well. For Hobson, knowing she's working for herself
does make the long hours worthwhile. "You may have to work at
night or on weekends," she says, "but you get to make
that decision yourself."