Why Higher Interest Rates Underscore The Importance Of Buying A Home Renovation Franchise
Learn how home renovation franchises have fared in recent history, what to expect in the near future, and why the current situation favors the franchise model.
By September 2022, the United States Federal Reserve has already raised the benchmark interest rates four times this year, and further increases seem likely. Why does this matter to home renovation businesses? Well, first, business owners tend to take out loans to finance their businesses. These interest rate hikes could make them less inclined to take out business loans now and can increase their costs.
Perhaps even more pertinently, interest rates can have a great impact on what the potential customers of home renovation businesses do. Renovations can be very expensive. Because of this, many homeowners look to finance them with loans or mortgages. Higher interest rates can make them reconsider this.
The factors that affect economic trends are complex, but to make things simple, it’s helpful to think of the past two years in terms of the Covid-19 pandemic. The government wanted people to keep spending money when many businesses were closed for health and safety reasons. Because of this, they kept interest rates very low, so people would spend more. And they did.
But because they couldn’t spend on things like vacations, many people spent on home renovations. The home remodeling business experienced a huge surge in demand in mid-2020. That demand is still strong, but it’s tapering off. All that spending, combined with gas and oil price increases related to Russia’s invasion of Ukraine, has led to inflation. To fight inflation, the Federal Reserve is now raising interest rates so people spend less.
The home renovation market is tightening. Independent businesses face a very stern task. They typically carry larger debts than franchised businesses because successful franchisors ensure candidates have strong finances before they partner with them. Furthermore, franchisors offer their franchisees a competitive edge.
For example, at Kitchen Solvers, we have a supportive and collaborative home office team as well as exclusive proprietary sales and marketing programs. We grant every franchise partner an exclusive territory, so they needn’t worry about another franchisee operating in their area. Last, we have relationships with top-notch vendors who offer our franchise partners discounts and homeowners financing for their remodeling projects.
At Kitchen Solvers, we are always looking for opportunities to work with qualified candidates as one of our franchise partners. If you would like to learn more about our home renovation franchise opportunities, please get in touch with us today.Back