My first day in the franchise industry was September 4, 2001. I joined a fast-growing franchise that was exploding with growth. However, one week later, after September 11 the phones stopped ringing. But not for long!
The tech market fell, and the world was in utter chaos and fear. We thought that was the end of our franchise, but we were so wrong. Over the next two years, we jumped from 20 to 200 franchises and saw massive growth!
In 2004 I began working as a franchise consultant, and I’ve learned a lot from the economic challenges in 2001, 2008, and now. I’d like to share that knowledge with you!
CAN SMALL BUSINESS FRANCHISES WITHSTAND A RECESSION?
Today, there are many fears about the instability of the market, inflation, and a possible looming recession. I’m often asked about recession-resistant franchises. Many people are concerned about what happens to franchises during a recession, since small businesses often suffer the most.
The franchise industry may be all about small business, but it’s not small business.
There are approximately 775,000 franchise establishments that support nearly 8.2 million direct jobs, $787.7 billion of economic output for the U.S. economy, and almost three percent of the Gross Domestic Product (GDP).
Franchises can not only withstand a recession, if invested in wisely, they can help an economy recover from a recession by generating economic output and jobs for entry-level workers, managers, and business owners.
RECESSION-RESISTANT PRODUCTS AND SERVICES
Many recession-resistant businesses provide essential products and services such as plumbing, HVAC, water and mold remediation, biohazard cleanup, health care, laundromats, professional recruiting, and expense reduction services.
However, I noticed there are many services that continue to grow during slower economies that most people never think about:
- Children’s tutoring & education. Parents will always budget for their children. During tough times, education provides hope and is an investment in the better times ahead.
- Fitness. Surprisingly, I noticed that people did not give up their gym memberships. If they had multiple memberships, they prioritized membership value, choosing gyms that offered the best workout and community and downsized to one.
- Pet services. People will continue to groom, feed and entertain their pets because they have become important members of the family. While the frequency of services may decline, the demand still remained steady!
- Home services. During a recession, people tend to stay home and not travel as much, so they invest in their homes. While large remodels (like kitchens or bathrooms) tend to slow, small projects (painting, floors, and window treatments) are a steady industry.
- Outdoor entertainment. Similar to home services, people who enjoy entertaining will spend money to make the outside of their homes comfortable since they aren’t going out as much.
- Beauty and wellness. This was the biggest surprise for me. Even during a recession, people will budget for haircuts, massages, or manicures. Especially with less travel, they will make small sacrifices to enjoy themselves and feel good.
A POSITIVE OUTLOOK FOR FRANCHISING
We may be living in uncertain times, but we’ve been here before and made it through intact. Franchises have survived recessions, strong economies, and weak economies. Even after the economic downturn from COVID, the franchise industry is growing.
The industry remains strong because franchise business models are proven systems and processes.
Instead of fearing the worst, think positively and act wisely—look into recession-resistant franchises.
To learn more about small business franchises that can succeed in unstable economies, read about the franchises I partner with and my process to finding the right franchise for you.
