By Evan Hackel
No one wants a recession. There may not be one. I certainly hope not. But here’s something you might not expect—every recession I’ve been through has been a great opportunity for growth. When I was with CCA Global Partners, we grew for 20 straight years through three recessions, averaging 29% annual growth. We never had a down year, and in fact, some of our best years were during recessions.
So, why do some businesses thrive while others struggle? Because they embrace a different mindset. Here are the key strategies for franchisors who want to turn a potential downturn into a period of expansion and success.
- Mindset: See Opportunity Where Others See Crisis
Recessions create opportunities that don’t exist in normal economic times. While others panic and focus on cutbacks, the savvy business leader looks for openings. A positive, opportunity-driven mindset allows you to see potential where others see risk. If you’re focused on growth while your competitors are retreating, you’ll gain an edge.
- Be Aggressive When Others Are Defensive
Instinctively, most companies cut back during a recession. While it makes sense to streamline operations, now is NOT the time to pull back on marketing. In fact, it’s one of the best times to invest. Here’s why:
- Less Competition – Your competitors are cutting their marketing budgets, meaning your message stands out more.
- Lower Costs – Ad rates and promotional opportunities become cheaper, giving you more value for your investment.
If you stay visible while others fade into the background, you’ll capture more market share and emerge stronger.
- Recruit Franchisees While Others Pull Back
Recessions shake up the job market, leaving many successful professionals looking for new opportunities. This creates a prime environment for franchise recruitment:
- More Candidates – Layoffs and corporate downsizing push talented individuals to explore business ownership.
- Less Competition – Other franchisors may be pulling back on recruitment efforts, giving you an open field.
With the right approach, you can bring in high-quality franchisees who might not have considered franchising in a stronger economy.
- Expand Locations & Acquire Struggling Franchisees
Now is an excellent time to encourage existing franchisees to expand. Why?
- Prime Real Estate is Cheaper – Landlords and property owners become more flexible on lease terms and pricing.
- Distressed Franchisees are Looking to Sell – Some franchisees may struggle, creating opportunities for stronger operators to acquire locations at a discount.
A downturn creates openings to scale efficiently and smartly.
- Invest in Training
If the economy is good or bad, investing in training makes sense. During recessions, it makes more sense as every customer opportunity is more important. Additionally, staff has more time for training as things are slower.
- Invest in Sales Training for franchisee staff– Increasing average ticket size, closing a higher rate of customers, and maintaining or growing margin are very important. For example increase average ticket size by 5%, which means their sales go up by 5%, improving closing rate from 40% to 50% increases their sales by 25% and raises your margin by 2% adds 2% to their bottom line. All of which result in higher royalties.
- Invest in Customer Service Training for franchisee staff – In a recession or any economic downturn, every one of your customers takes on additional value. Customer service training lets you attract and keep more of them. Excellent service also delivers referrals.
- Train Your Franchise Sales Staff Too – Good selling skills and programs are not good enough. In lean times, you lo need to take your selling skills to the next level for an essential competitive advantage.
- Train Every Franchisee on Your Systems – When times are good, franchisees tend to not implement all of your initiatives and programs. Use the recession to revitalize programs that you know will have a significant benefit to your franchisees and make sure you provide the needed training and support to make that happen.
- Focus on Franchisee Profitability
Supporting franchisees in maximizing profitability is crucial, especially in a downturn. Here’s how franchisors can help:
- Renegotiate Leases – Many landlords will be open to negotiating lower rents or better lease terms during a recession.
- Value-Based Offerings – Adjust pricing, promotions, and product mix to appeal to cost-conscious consumers while maintaining strong margins.
- Increase Gross Margin – Look for ways to improve purchasing efficiency, reduce waste, and enhance operational productivity.
- Maximize Marketing ROI – Ensure every marketing dollar is spent effectively, targeting high-converting channels and optimizing campaign performance.
By helping franchisees operate more efficiently and profitably, you strengthen the entire system.
- Renegotiate Vendor Agreements
A recession impacts suppliers, too. That means they may be open to renegotiating contracts. You can:
- Lock in lower pricing on key supplies.
- Negotiate better payment terms.
- Strengthen partnerships for long-term gains.
Every dollar saved on vendor agreements adds to your bottom line.
- Upgrade Your Team
In a tight labor market, hiring top talent can be tough. But during a downturn, great employees become available. This is the perfect time to:
- Recruit high-quality team members.
- Upgrade staff in key positions.
- Strengthen your overall workforce with people who might have been unattainable before.
- Acquire Other Franchise Systems
Some franchise brands will struggle during a recession, opening the door for acquisitions. If you have the capital and operational strength, this could be the perfect time to:
- Acquire complementary franchise systems.
- Expand your market reach.
- Strengthen your portfolio at a discount.
Final Thoughts
While a recession brings challenges, it also presents tremendous opportunities for those willing to adapt and take action. With the right mindset and strategy, you can position your franchise system for long-term success.
So, if a recession does come—yippee! While others panic, you’ll be seizing the moment and setting your franchise up for unprecedented growth.
Are you ready?
About Evan Hackel
As author, speaker and entrepreneur, Evan has been instrumental in launching more than 20 businesses and has managed a portfolio of brands with systemwide sales of more than $5 billion. He is the creator of Ingaged Leadership, is author of the book Ingaging Leadership: The Ultimate Edition and is a thought leader in the fields of leadership and success.
Evan is the CEO of Ingage Consulting. Reach Evan at ehackel@ingage.net, 781-820-7609 or visit www.evanhackel.com