Maybe yes and the good news ends here. By Kapil Mohan Dhingra

Almost all seasoned economists, financial experts and who’s who across industries around the world playing safe about the business prospects in 2010 and the message is consistent - “slow, incremental growth”. Everyone is hoping that the business will grow and will take another cautious step towards the good times. Clearly, franchising struggles with challenges – some new – economic slowdown, limited & tougher access to capital, decreased consumer spend and a few old ones – franchise laws, policy frameworks. These challenges together with a general depressed mood in the market, create further uncertainty and are having an adverse effect on entrepreneurs.

I also believe that from franchisor’s perspective, the biggest concern going into 2010 would be access to capital, whether it comes from selling unit franchisees in new territories or by getting funds at the enterprise level. The availability of small business loans for start-up franchises has been very challenging, but should improve somewhat by interest shown by a few enterprising financial institutions. The second biggest concern and in a way related to the main issue would be the performance of franchisees at the unit level. It’s a catch-22 situation. Franchisees need more support during tougher times (read - increased spending from the franchisor or lesser royalty payments being charged). Sadly most franchisors start doing just the opposite, cutting costs and pressurizing franchisees to achieve better sales. If new franchise unit sales remain slow and I am guessing that they would, franchisors will really have to step-up their support to existing franchise owners.

However, in line with the positive mood, the franchise business is headed for better times. I believe that same-store sales, franchise unit growth and employment will see growth though the percentage might not be as exciting as in previous years.

No prizes for guessing that the revival will be led by actual consumer spending on products and services. I strongly believe that F&B (quick-service & full-service restaurants), Healthcare – Lifestyle & Medical and retail products and services will be the flag bearers of the comeback. Though the growth figures will still remain in single digits, yet it will be an encouraging sign, considering that from 2008 to 2009, growth was essentially flat, if not declining. The recession probably ended along with the second quarter results announcements from most corporate houses. It is not unusual to expect a more solid, firm growth after such a severe recession. However, despite this silver lining, of course, is that the unemployment continues to rise even after the perceived end of recession. And sadly, this trend is expected to follow in the coming months.

In all, 2010 could be a pivotal year for the franchise industry as a whole and it is up to all of us who are engaged in this business to give it the push it needs.