The Concept of a Recession-Resistant Franchise

Author: BeTheBoss.ca

Date: JUL 17th, 2017

Topic: Industry Experts


With all the Canadian franchises out there today, finding one can prove to be quite an extensive task. One concern all prospective franchisees share is a natural one: how well will this brand fare in an economic downturn? While there is no one franchise that is guaranteed to easily handle a period of recession in the economy, there are areas you can explore to help protect your investment, time and effort in the long term.

 

Consider the industry

Industries with more history and depth tend to be more stable, as unexciting as that may seem at first. Categories like automotive, food, business services and residential services have been around for a long time, so even new franchisees can succeed by entering with an improved system.

Once you've narrowed down your industry search to a specific one, you can start looking at the brands in that sector with the best track record. The franchisors with years of experience can demonstrate if and how they handled downturns in the economy. Franchises rarely advertise they are "recession-proof" any more, and that's not a bad thing because it's a pretty bold claim to make. In reality, any claims from franchisors should not be taken at face value alone anyway; you need to research to see if those claims hold water. On top of your own research, speaking to current franchisees is a great way to get some real information firsthand.

 

Look at the category

It can be argued that some business categories are simply in a better position to handle downturns in the economy. With residential services that are mobile, for example, the franchisee can adjust staff according to business volume and does not have to worry about handling an expensive physical location. Business-to-business franchises will sometimes provide targeted services to companies that will always need those services, regardless of the state of the economy. Other essential services, like hair care and fire restoration, also have built-in customer bases, even in tough times. The more essential a service is, the more likely it will handle rough economic times better. Some services, while not essential - like child education - may also thrive because of their importance to the consumer.

Any investment you are considering poses a risk, by doing your research and taking a risk you're comfortable with, you'll be in the best position for success.