Franchisors also feel recession's financial pinch

March 30, 2009
About two dozen franchises are based in Indiana, according to Arlington, Va.-based Frandata. They include Noble Roman's Inc., Do It Best Corp., Steak n Shake Enterprises Inc. and Wild Birds Unlimited Inc.

They're no more immune to the recession than any other business. But franchises sink or swim on their ability to attract affiliates. That's why some have begun making concessions to new franchisees.

For example, Carmel-based Compu-Child Services of America Inc. has reduced its franchise fee and is also waiving royalties. The small chain, which offers computer classes to kids in preschools and day care centers, was founded in 1994 and now has 58 franchisees.

Its president, Julie Standish, and her husband, Rob, bought the whole franchise last year. She said its concept appeals to women who want flexible parttime jobs. The CompuChild brand aims to ensure toddlers learn comprehensive computer skills, not just how to download songs into iTunes.

Normally, it costs $17,500 to start a CompuChild franchise. But Julie said she's currently knocking $3,000 off the price and allowing three months with no royalties to entice new franchisees.

Even so, potential affiliates are hard to come by. Julie said the biggest hurdle is access to capital. Folks who show interest in the CompuChild concept have difficulty securing loans, since banks' credit requirements have increased and home equity isn't the resource it once was.

Julie nearly inked a deal recently, but it fell apart when the would-be franchisee got skittish. Turns out she saw a segment on a morning news show about how the recession is forcing mothers to take their kids out of day care centers. Some were getting free child care from grandparents or neighbors, according to the report, while other mothers had simply lost their jobs.

Even so, Julie remains just as bullish on the CompuChild franchise as she was a year ago.

"For most families, cutting spending on their children is the last thing they want to do. People spend money on their kids and their pets," she said. "The fact that we're doing as well as we are, given the economy today, just means as soon as things pick up, we'll be ready to
explode."

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