6 Reasons Why Starting a Franchise is a Smart Idea During a Recession

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When the economy is struggling, it’s likely that the last thing on your mind is launching a business. Today, we aim to give you a different perspective and show you the reasons why starting a franchise during a recession can actually be a smart idea.


Recessions present many difficulties. People become unemployed, businesses fail and the fortunate ones cut into their cash reserves. However, franchises are often more able to weather the storm of the weaker economy and make sure they come out on top. By taking the franchise route, you can operate under an established brand with an existing customer base and receive support from a franchisor with heaps of industry-specific expertise. To give you some reassurance and inspiration if you are at a crossroads due to the current COVID-19 crisis, today we provide six reasons why starting a franchise is a smart idea during a recession.


1. Can make a fresh start

If you’ve lost your job, you can use this opportunity to enter a completely new sector and follow your entrepreneurial dreams. The beauty of franchising is that, a lot of the time, you don’t need any previous experience in the industry. If you were to start a business from the ground up, you’d need a substantial amount of knowledge and experience to be successful.

As you can follow the franchisor’s tried and tested training programme, you can go from complete newbie to total pro in no time. You might find that certain sectors are doing better than others as a result of the recession, so you can use franchising to launch your own business that will be a hit with customers.

2. You will receive training and support

By starting a franchise rather than taking the independent start-up route, you will take part in a comprehensive training programme and receive ongoing support. Running a business at the best of times isn’t easy, so having your franchisor’s expertise to guide you will prove invaluable during a recession and with any other issues that arise during your franchising journey. To see more pros of taking the franchise route, see another one of our articles.

3. Less competition

When the economy is thriving, lots of people will use it as an opportunity to follow their dreams of being their own boss. However, with there often being less funding about during an economic downturn, lots of independent start-ups will be deterred. Many franchises have strong relationships with banks and are generally considered to be a less risky route to business ownership, so you should still be in a good position to receive funding.

It’s also worth noting that your family and friends might not want to invest money into stock or real estate during a recession. So, they may be interested in financing part of your venture. They know and trust you – and are probably familiar the franchise brand you’re investing in – so, if you have a robust business plan, you’ve got a good chance of raising the capital you need.

4. Can get better rates

In weak economic times, businesses will be selling off assets and things will cost less as a result. You might be able to get office space for cheaper prices and discounts on stock, as vendors will want to move it quicker.

Economic recessions can also mean you have more negotiating power. When the economy isn’t doing well, vendors often have trouble shifting products. So, during this period, you will be in a better position to negotiate a good deal that can benefit you now and continue to further down the road.

Make sure you speak to the franchisor and read the franchise agreement fully so you know whether there are any restrictions on the suppliers you can use.

5. Talented individuals are looking for work

When you’re recruiting employees for your franchise, you’ll want to make sure find people that will share your values and be a good fit all round. With layoffs being more prevalent during an economic recession, there are often more highly qualified individuals on the job hunt. This will also come in handy when you want to grow your business and need to expand your team.


6. You’re motivated!

If you or someone you know has been suffering because of economic recession and you’ve got an opportunity to turn things around, you’re going to work hard. Being too comfortable can actually mean you lack the motivation you need to take your business to new heights. When you have fewer options, you have more incentive to push harder and you’re more likely to do anything you can to make sure your business succeeds.

Starting a franchise can be a wise move during a recession

It’s likely that the effects the COVID-19 crisis has had on our economy will impact us for some time. But, as we’ve discovered, starting a franchise can be a good idea even when economic times are tough, as long as you don’t make any hasty decisions.

Use this time to create a business plan that’s got you covered for any health or economic crises in the future. This frightening time is a lesson for how to create a more resilient business for the future. We 100 percent recommend creating a crisis contingency plan for your business to protect you as much as possible.

Use our resources to help you through this time

If you need some reassurance, you can check out these six ways businesses have overcome economic crisis and how franchising has historically weathered the storm of global recessions. So you know where to look, we’ve compiled the top 10 recession-proof business sectors. If you’re looking for new business ideas, you could check out these top eight home-based franchises for every investment level. Then, you’re also in a better position if another global crisis like the COVID-19 outbreak occurs.

We also have lots of coronavirus-related content you can browse:

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