Will Franchising Flourish in a Recession?

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asked about 2 months ago

In a recession, when job loss is a harsh reality, finding a new job is difficult and lenders are tightening up, franchising often gains momentum.

When a recession hits, consumer spending tightens and many industries suffer in loss of turnover. This leads to companies cutting back, which usually equates to an increase in unemployment rates.

Lack of job security, as well as the simple difficulty of finding a job opening during a recession, often forces people to make decisions they may not normally consider in a more buoyant economy.

And it is in these times that franchising comes to the fore and shows off its true potential.

Recession-Proof Industries

When jobs are hard to come by, franchising can be a very logical and rewarding option for many people of all ages across a wide range of industries. To create your own job, work for yourself and be your own boss makes a lot of sense.

Couple this with working with a company that already has brand awareness, a large marketing budget and tried and trusted business systems already in place, the franchise business model is an ideal choice.

And, according to franchising expert Derek Cafferata, CEO and President of All State Franchise Finders, choosing a franchise that is within one of the more recession-proof industries, is what you need to do.

“Some industries seem to actually thrive in a recession,” says Derek. “And if you can find someone with the right kind of business and marketing knowledge and experience to guide you, you can give yourself the best possible chance at success.”

Some of the most recession-proof industries are those that offer necessity services, such as hairdressing, child care and tax services. These are industries that, whether in an up or down economy, people have to spend money on.

Franchises in industries that follow high demand are also good to consider, such as those that offer aged care services or unemployment support services.

Industries that offer third-party services, like insurance claims, also tend to thrive in a recession. “Auto repairs, home repairs and maintenance, plumbing and electrical services tend to be a good option during a slower economy,” says Derek. “When insurance is paying out, a downturn in the economy has little effect.”

Helpful Sources of Start-Up Capital

One of the best sources of start-up capital for new franchisees is in-house franchise financing. This is where the franchisor finances either part of or the entire loan amount. Franchisors tend to offer a number of different loan structures, whether it be delayed initial payment, no principle or balloon payment structures.

According to Derek Cafferata, franchisors are usually happy to work with a new franchisee to structure in-house lending that suits the individual.

Other helpful sources of start-up capital include the traditional bank loan, specialist lending options like veteran loans, as well as Small Business Administration loans and home mortgage lending.

Franchising Business Success

Going into franchising, like venturing into any business for yourself, has its risks. Despite some of the statistics you may come across over the Internet, franchising is not risk-free and some franchisees do fail, whether it be two years or ten years down the track.

“The greatest success for any potential franchisee is to find the right franchise that suits his or her needs, financial position, experience and goals,” says Derek. “The right guidance and advice a new franchisee can get before signing up with any franchisor is invaluable.”

Whether you consider yourself an entrepreneur or not, franchising definitely has its advantages and many people with all levels of business experience often find franchising to be a very attractive proposition.

Utilizing the knowledge and experience of a company like All State Franchise Finders is one of the wisest moves a potential franchisee can make. Derek Cafferata and his team work with hundreds of new franchisees, helping guide them through the complex and often daunting task of franchise selection, financing and start-up.

For more information about franchising, contact All State Franchise Finders today on 1-800-544-2161 or visit allstateff.com today. All State Franchise Finders are highly respected within the franchising industry across the United States and are considered one of the leading franchising experts.