The Wall Street Journal ran a commentary by Alan Blinder today entitled, “The Economy has Hit bottom.”  He described the economic indicators which suggest once the recession does hit rock bottom, then, and only then, will it finally start climbing back.  In the meantime, small and big businesses continue to struggle with the recession and the decision to file bankruptcy.  CIT Group, one of the largest lenders for small and mid-sized businesses, has been struggling with the decision to file or not to file bankruptcy.  After being rejected for additional bailout funds, they have sought to restructure their debt obligations in order to avoid bankruptcy.  Even though they are struggling to avoid bankruptcy, many companies have emerged stronger and better from the bankruptcy process.  Some small business franchises have actually benefited from their parent company filing for bankruptcy.

One example is Cork and Olive, a small wine retail franchise chain located in Florida.  Owners of franchises had begun noticing issues with the parent company like not receiving requested inventory.  Eventually the parent company filed for bankruptcy.  At first the process was challenging because of public perceptions about bankruptcy and a slew of unanswered questions.    CNNMoney.com recommends that if you perceive that your franchisor is going towards liquidation then attempt to acquire the rights to the mark.  Richard Carlton, one of the owners of the Cork and Olive franchise, states that his store has actually become more profitable since the franchisor’s filing for bankruptcy.  He is able to make more decisions and implement changes with less franchisor oversight.  An added perk is that he no longer has to pay the monthly franchise fee.

Small businesses are feeling some of the tightest squeezing by this economy.  Companies, like CIT Group, that have historically helped small businesses are being forced to pull in the reigns on credit they previously allotted to small businesses.  When your franchisor files for bankruptcy, you don’t necessarily have to follow.  Regardless, your franchisor’s filing will have some type of affect on how you continue to operate.  Before you simply close up shop, get more information about your options and how restructuring debt can help you and your business.  Your financial situation may be such that it is better in the long run for you to also consider bankruptcy and restructuring.  More and more businesses, like Six Flags and Mrs. Fields, are using bankruptcy as a tool to emerge strong and more competitive to survive in this economy.  Deciding whether to file, is an important decision.  Contact a qualified bankruptcy attorney to explore all your options.  Bankruptcy doesn’t have to be rock bottom.  It can be a new beginning.