The thought of a recession can be scary. I get it. I remember living through the 2008 Great Recession as I’m sure most of you reading this also do. Negative headlines about shrinking job pools, cooling housing prices and high inflation can get all of us nervous. 


But, as franchise systems, we really have a leg up. Franchise models are built to be sustainable and offer owners tools to operate as effectively and efficiently as possible during difficult times. Not only that but in times of economic uncertainty or layoffs, many out-of-work mid-career individuals quickly become people searching for a better opportunity and means to control their own destinies. 


In this piece, we’ll briefly look at how to recession-resistant your franchise and then leverage that in your marketing efforts to franchise prospects.

Focus on profitability while planning for risk


The key to creating a recession-resistant franchise model is to focus on long-term sustainability and profitability while also recognizing potential risks that may arise for both you as a franchisor and your franchisees. Franchisors should consider how their business model can be tailored to respond to market volatility and ensure they are able to continue providing quality support to franchisees so they, in turn, can best serve their customers. To start, franchisors should ensure their product or service meets a need that is consistent in any economy. For example, service-based franchises like commercial cleaning, home healthcare, home repair and maintenance, and tutoring all tend to be in demand regardless of whether an economy is booming or experiencing a downturn.

But even restaurant franchises can and do get creative during less-than-ideal economic times. One thing that’s typical during downturns and recessions is an increase in value menu offerings. For example, Yum Brands, the parent company of Taco Bell, outperformed quarterly earnings estimates announced in Q1 of this year largely due to more people searching for value-based food options when going out. Value-based food has a market in good times but is more sought after in economies that are struggling.


Whether times are good or bad, ensure your franchisees are prepared

Franchisors should also make sure their franchise model can be managed profitably in both good and bad economic times. This means ensuring franchisees have the tools, training, and support to run their business efficiently and effectively during a range of economic conditions. Franchisors should also consider how they can adjust pricing models or services in order to maximize profitability during difficult market times. Whether it is offering more value-based offerings or providing shorter-term engagements if your franchise focuses on servicing customers on a consistent basis (like a tutoring service or swimming school). 


Franchisors should consider how to best support their existing franchisees during economic downturns. This may involve offering incentives or assistance with marketing efforts, increasing access to capital, or providing additional training.

Marketing a recession-proof model to franchise prospects


Recessions are a ripe time for more franchise prospects. As people are laid off from jobs and find themselves at a turning point, it’s not uncommon for them to look in the mirror and say something like “Why am I letting someone else control my career”? 


As we in the industry are well aware, we offer something that’s not possible for someone looking to start a business from scratch: A template and roadmap to build a business quickly, predictably, and pragmatically.

In addition to having a model that is recession-proof, franchisors should consider how to market their franchise model to prospective franchisees. This involves recognizing the immediate needs and concerns of franchise prospects and addressing them in a meaningful way. For example, offering lower start-up costs or flexible terms may help attract prospective franchisees who may be more cautious when investing due to economic uncertainty. Franchisors should also focus on the long-term potential of their franchise model, highlighting factors such as potential profits and growth opportunities—revising your Item 19 to ensure it is up-to-date and aligned with what you want to present to franchisees— to demonstrate that investing in a franchise is not just a viable option but a stronger alternative to taking another job. 

By taking the necessary steps to make sure their franchise model is recession-proof and marketing it effectively to prospective franchisees, franchisors will be able to protect themselves and their franchisees from economic uncertainty while maintaining and even growing their own business. 


About the author:

Tim Conn, CFE, is the President and founder of Image One USA. He is the author of “No New Ideas: Everything You Need to Know About Starting a Successful Franchise.” Franchising since 2011 and with a corporate headquarters in the Chicago suburbs, Image One launched a new franchise affiliate program in 2015 to further expand the franchise nationwide. Since then, the franchise has added owners in regions across the country, including in Cincinnati, Denver, Detroit, Fort Myers, Nashville, Orlando, Atlanta, and Houston.