With the global recession looming in everyone’s mind, many have sought fast food as a haven. Indeed, interest in franchising is up as an alternative to finding work due to unemployment. Further, until just recently, fast food stocks outperformed many others. However, as reported in today’s Wall Street Journal, “Burger King’s weak March sales report last Wednesday sent its stock sliding 20% by week’s end.”
The article goes on to state that 48% of food spending in the U.S. is designated for restaurant purchases. Whereas in 1975, that number was just 37%, and this recession may bring the trend much closer to 1975 numbers. This is worriesome from a legal perspective, especially for those looking to start a franchise, because all too often, people believe that fast food franchises are easy money.
With that in mind, it is vital that anyone looking to purchase or start a franchise put serious thought and significant due diligence into the long term viability of these businesses. This could be a fantastic time for great bargains, but the adverse repurcussions of hasty decisions could be felt for years ahead. For more on fast food bargains and the pitfalls associated therewith, the website www.DistressedAssetLaw.com is a good resource for what to do and what not to do when buying any business, including franchises.