The new check cashing instant clearing will take some time to get use to. If checks clear immediately and deposits take a few days then franchise outlets may find more bounced checks in their establishment.
We might also see a major shift in Thursdays Advertising inserts in the Newspapers, also a shift in Thursday junk mail coupons. Retail outlets will not wish to run sales items on Thursdays because they will get too many bounced checks.
When ATM cards became more widely used we saw a slow trend away from Thursday ads and it became more spread out over Fridays. Also many mailer coupon packs that are run by franchises may need to switch their delivery dates to coincide more with weekends as the paychecks people get may not have cleared their accounts, while every check they write will.
There will of course be more bounced checks in the short term, meaning that this will cost franchise retail outlets and effect their cash flow, while the banks will increase profits within the next two to three quarters due to increased banking fees for those bounced checks during this Christmas Shopping season. If you will recall a couple of years back banks made additional dollars by allowing electronic debits to run over and then collecting the fees for over charges per transaction, increasing profits by nearly 30%. During this same time Christmas sales were able to remain strong since the consumers were buying on money they did not have, thus the whole process mimicked super high interest short-term loans.
We in franchising need to understand that every single thing that is changed anywhere in the economy will effect our businesses, some good, some bad, some just different, never the less we are effected. I have talked to few franchise outlets who believe this trend is significant, yet as consumers become more indebted we will see more and more of them running redline, paying credit card payments with other credit cards.
As the float is taken from consumers who are use to it in their habitual shopping habits and given back to the banks, we will see more bounced checks in our franchised outlets, this will also effect franchisors in late royalty payments of those franchisees who are in economically depressed or job-recovery areas of our country.
The consumer's cash flow becomes the franchised outlets cash flow, which affects the franchisor's cash flow. Bank profits will increase significantly in the interim on the backs of these consumers and we will feel a slight pinch and changing of shopping day peak trends as these new banking policies come into play.
We are always interested in what effects your bottom line as a small business, franchise outlet or even a large Corporate Box Store as retail sales in our economy effect jobs, factory orders, consumer confidence, stock market, money flows and the future of the business cycles, you should be too.
"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs