Not exactly the Midas touch…

Keeping up with what’s going on with Midas (MDS) these past few days in terms of SEC filings takes something of a scorecard. Last week, the company announced that its’ annual report — due last Thursday — would be late. And then a British investor who owns just over 8% of Midas stock filed this 13-D asking the company to drop its poison pill.

But it was this passage in the 10-K that the company did file on Monday that caught our attention. In a nutshell? A bad economy is good for franchisees:

Economists forecast that the unemployment rate will continue to rise in North America in 2009. As companies lay off workers, many people will be searching for new ways to earn money. For those who are not laid off, the fear of future layoffs may also motivate them to search for alternatives in which they can be their own boss, and have greater control over their own financial well being. While this economic environment will likely stimulate increased interest in becoming a franchisee, most candidates rely at least in part on financing in order to buy a franchise. However, because the credit markets have been tight, MDS anticipates availability of financing will constrain the growth in the number of people who become franchisees in the near term.

Maybe it’s just us being cynical, but banking on a bad economy to help grow your franchise business doesn’t exactly seem like an airtight business plan.