Tight money is beginning to put a noose around the rapid growth of franchised businesses, a survey by a University of Maryland marketing professor indicated yesterday.
The study of 94 companies with 60,000 franchised outlets showed three quarters of the firms say their expansion is being adversely affected because franchise buyers can't obtain financing for new units.
Almost two thirds of the firms surveyed -- 64.7 percent -- said their existing operations are having trouble borrowing money from either private lenders or the Small Business Administration, reported Professor Philip G. Kuehl.
Despite tight money, however, the survey showed chains are continuing to grow and generally are doing better than independent businesses, reported the Washington-based International Franchise Association.
The trade group said about seven-tenths of one percent of all franchised businesses in the United States were closed by business failures and another 1.1 percent closed for other reasons.
For many franchised companies, the U.S. market is becoming saturated so they are shifting their growth to foreign outlets. The survey showed 42 percent of the franchisers are now selling their services abroad and another 39 percent are planning a foreign thrust.
Canada is the leading target for foreign growth, named by 23 of the companies, followed by Japan -- 10 percent -- and Australia, Belgium, Germany, Hong Kong, and the Phillipines, each cited by 5 companies.