Originally published in Entrepreneur
By Danny Cattan and James Vitrano
There’s no polite way to put this: The coronavirus (COVID-19) crisis is going to cause a lot of franchise owners who aren’t properly diversified to take it in the teeth.
Like other tough times before it — from 9/11 to Hurricane Katrina to the 2008 financial meltdown — the current COVID-19 pandemic, which shows no signs of immediately letting up, has reinforced the importance of franchise diversification.
Diversification is a smart move for any kind of portfolio or investment. You wouldn’t want your retirement savings to be entirely in stocks — you’d want it spread across a mix of cash, bonds, stocks and other assets. The idea is that a downturn in one category is offset by steady performance or gains in the other categories.
Not being diversified means exposure to more risk and considerably more financial pain when things go south, as they inevitably do from time to time. Given this troublesome fact of life, the franchise owners who will best be able to withstand the economic havoc from the coronavirus crisis are those who are properly diversified.
Anyone who is thinking of getting into the franchising business needs to understand this important lesson.
Read the full article at Entrepreneur
Danny Cattan is Director of Global Franchise Development at Fat Tuesday. James Vitrano is Chief Development Officer of Fat Tuesday.