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Franchising:the golden road to the golden mean

The pessimism and fear that has settled in over the larger economy is now increasingly palpable in the franchise community. The unbridled optimism of the last seven years has in the past seven months changed to an unbridled pessimism. The one constant between the two seemingly polar states is that both are and were unrealistic. The economy was never truly as strong as it appeared back in 2006 and 2007 and is not nearly as weak as some believe to be today in 2009. Over the course of the next year our economy will in the language of statisticians revert to the mean. Stated differently, and using a more metaphysical description of the state of our national affairs, our economy (and our economic behavior) will move to what Aristotle called the golden mean. The golden mean is the desirable middle between two extremes, one of excess and the other of deficiency.

 

What does any of this have to do with franchising one might ask? Apart from the ineluctable fact that franchising is inextricably bound to the larger economy, franchisors need to be the engine that leads the economy out of the forest of gloom. In order to do this, however, t he franchise industry must first accept that “that was then, this now”. Like the larger economy the supply of cheap money enticed franchisors and franchisee alike into business decisions that were not sound. The faster the franchise industry fully accepts that it is not “recession proof” as some had claimed, and that it too was drunk on the supply of cheap money the faster the US economy will turn around.

The composition of the franchise industry has been forever altered. But that is by no means a negative. As we find our collective footing in the new economy, a return to the

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