Recession: Clamp on wallet illustrates a stop on spending
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How Franchises Perform Better in a Recession

Being in business for yourself but not by yourself is the promise of franchising, and you’ll never need more help as a business owner than during an economic downturn. And It appears Canadians are headed towards one right now. Following the rise in inflation sparked by the pandemic and other economic factors, we’re now contending with a potential recession, and recessions often pose significant challenges to businesses, resulting in layoffs, closures, and system-wide shutdowns.

If that last sentence scares you or puts a wrench into your business plans, don’t fret. Franchising has proven to be a suitable economic model for weathering those storms, which means it’s ideal for recession-proofing a business idea. Read on for reasons why a recession may actually be beneficial to your franchise plans.

But first, what is a recession?

While the term itself has become something of a buzzword, a recession is defined as a period of temporary economic decline during which trade and industrial activity are reduced, with a fall in GDP in two successive quarters. While recessions can be as short as a few months or longer than a year, it takes a long time for any economy to recover after a serious downturn.

Are we in a recession?

Graph displaying a stock chart in the red, big dip, recession.

The honest truth? We can’t be certain. While we haven’t met the stipulations for the dictionary definition of a recession, many analysts say Canada’s well on its way to recession territory. And many franchisees and their customers are feeling the effects of inflation. A survey conducted by Western Grocer revealed that over a quarter of respondents reported paying “much higher” prices for their groceries.

What are the benefits of franchising during a recession?

As it turns out, franchising has its benefits over starting a business from scratch in a recession. While the idea of paying someone to activate their concept might seem far-fetched, it certainly beats flushing a whole lot of money into starting from scratch. Through franchising, you can take advantage of your chosen brand’s existing brand recognition, customer base, and marketing campaigns.

By starting your own business independently, you run the risk of running out of money without having an established marketing campaign or existing relationships with customers to fall back on. This can be an extremely precarious position, especially in a recession. It’s best to not go it alone.

Lean on your relationships

As franchisees would normally lean on their relationships with the franchisor for support, this relationship becomes doubly important during a period of economic downturn like a recession. In the franchising system, a franchisee will have a network of fellow franchisees and the franchisor to share tips, advice, and insight, and, hopefully, lessen the impact of an economic downturn. On the other hand, an independent small business owner may be left on their own during an economic dry spell.

Less competition

While a recession may scare off some potential business owners, there are actually benefits to getting started during a recession. For one, there will be less competition in the marketplace. For confident investors who have the means to weather a storm, a recession can present the perfect opportunity to plant seeds in an industry or location before everyday Canadians are ready to return to normal spending.

Better locations

During a recession, fewer businesses are purchasing property, giving savvy investors a red carpet to the location of their dreams.

Access to additional financing

While banks and lenders are traditionally more conservative during a recession, having the backing of a proven system with an established track record of success can make businesses seem more appealing to financial institutions.

Which franchise industries are recession-resistant?

While no franchise industry is perfect, prospective franchisees should look for opportunities in industries that can stand up to shifting consumer preferences. Of course, it’s always important to find a franchise you’re interested in because you’re going to be spending a lot of time in the business! That being said, Franchise Canada turned to its franchise consultants from FranNet to find out which franchise industries are looking to grow in 2024.

READ MORE >>> 📈 2024 Trends in the Canadian Franchise Industry

Health and wellness

Canadians are becoming increasingly health-conscious; as our population ages, our bodies “need more help” to continue to enjoy our lifestyle choices. Service-based franchises that cater to these trends are poised to continue growing in 2024. Fitness examples include boutique fitness studios (cardio and strength training, yoga, etc.); wellness examples include physiotherapy, massage businesses, and healthy food outlets. This trend aligns with the growing societal interest in well-being and the desire for healthier living options. It’s important, though, to understand the competitive landscape as some of these sectors are crowded, so the search for a strong location will require some patience.


Education will continue to be another strong category. While demand for tutoring will continue, the supplemental education sector (STEM/STEAM: science, technology, engineering, arts, math) will see larger growth as these franchises help our kids be better prepared to use the evolving technology of the future.

B2B franchises

For people with B2B sales backgrounds, business services that solve ongoing business needs will continue to flourish (i.e. digital marketing, IT support services, business coaching, property maintenance); these are often lower cost because they don’t require a prime retail location.

So, should I open my franchise during a recession?

While it can be challenging to know when is the right time to open a business, don’t let a recession stop you from fulfilling your business dreams. Remember, while most people will wait until the economy is on an upswing, you can be ahead of the curve by establishing your business during a downturn.

The franchise landscape in 2024 will be shaped by several factors—the same as any other year. Be sure to harness innovation and meet the needs of the market in order to be well-positioned in this dynamic environment.

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