Whether you’re at the end of your tether with employment or are simply considering regaining control of your career, franchising is a great way to be your own boss. It is a securer route to business ownership in that you’re becoming a part of a proven, established brand, whilst enjoying the freedom of having a better work life balance. Being your own boss is great, but owning a business that is recession proof and continues to see constant demand during economic challenges is even better. Many franchises are able to operate effectively both through economic recession and health pandemics. In fact many franchise businesses were able to demonstrate resilience during COVID-19 and the cost of living crisis of 2022, adapting and diversifying their business models to enable their franchisees to continue operating soundly.
Contents of this Article
Table of Contents:
- What is a Recession?
- What are Franchises?
- Recession Proof Franchises – The Top 10
- Summary of Recession Proof Franchises
What is a Recession?
A recession is a term given to an economic status where financial activity falls. There are a number of reasons behind why recessions happen. Poor climate can affect produce of food and supplies leading to reduced trade, whilst more recently conflict in parts of the world has damaged supply chains for things like food, gas and fuel sparking a cost of living crisis. As supplies fall and demand continues to grow, the prices of what little supplies are available soars, people struggle to afford, struggle to pay for essentials and this is considered a recession. Recessions can last for months, even years. As well as being difficult for consumers it can also be a challenge for businesses as well.
What are Franchises?
Franchising is a term given to a method of business expansion where a business will license out the rights to trade as the brand to entrepreneurs, for them to operate the business in their own area. One such famous example is McDonald’s. The McDonald’s franchisor (the owner of the McDonald’s brand) will let franchisees (investors, entrepreneurs) purchase (invest) the rights to trade as that business in their own area. This enables the franchisee to be their own boss whilst enjoying having the rights to trade as a proven, successful business model as opposed to starting up a business from scratch.
There are many benefits of investing in a franchise to run your own business, compared to starting up alone. Franchising offers a supportive framework that you wouldn’t get if you started up a business alone. This framework enables you to benefit from a proven brand, access to the franchisor’s suppliers and system of operation, plus the wealth and knowledge of the franchisor and the brand’s history.
There are many different types of franchises, from coffee vans to children’s after school and out of term clubs. Many have been able to demonstrate resilience during recession and economic challenges.
One of the reasons why so many people are choosing franchising as a means of business ownership is because of the support. Unlike starting a business from scratch, franchising offers a business in a box, providing full training, support and everything you need to get up and running. This support might be from the franchisor (such as providing training in finance, business management and day to day operation), it may also be support from banks. Most banks are able to lend up to 70% of the franchise investment. Franchisors will often have a number of partners and suppliers depending on their trade which you’ll have access to as well. If you’re looking for a career that ticks all of the right boxes, why not consider franchising?
10 Types of Recession Proof Franchises
It should form part of your due diligence when exploring franchise opportunities as to whether a specific franchise is recession proof. However in this article we will take a look at ten types of franchises which are frequently able to overcome these challenges. There are many types of businesses which even during a recession, are still in constant demand. Take a moment to think about the things you can’t go without. Healthcare, utilities, food for example. And then think when something goes wrong. You become ill. Or your boiler fails. Or you’ve had a rough day at work, don’t feel like cooking and order a takeaway. Behind each of these are businesses, many of which are franchises. From domiciliary home care to handyman and food ordering franchises – there are many types of recession proof franchises, here are just 10 types. Let’s take a look along with the typical average initial investment.
1. Automotive Franchises
Automotive related franchises are businesses which trade within any area of vehicles on the road. There are a wide range of auto related franchises out there and many are able to survive during both recession and pandemics. One of the most recession proof of them all is fuel franchises. Petrol stations and electric charging businesses are amongst the most sustainable. Dependence on foreign oil is slowly declining, just as demand for electric cars slowly increases.
Electric charging points are becoming more and more common, and a number of automotive franchise businesses specialise in placing and maintaining electric car charging points. Petrol station franchises are just as recession-proof as the number of road users continues to soar. There will always be a demand for automotive related franchises, even during pandemics like that of COVID-19 where queues for fuel led to shortages and price hikes.
Not only fuel franchises, but other types of auto businesses are recession-proof as well. Garages, auto repair and mobile windscreen repair all continue to see strong demand during recessions and pandemics. Many road users encountered various problems with their cars following periods of disuse during pandemic lockdown of 2020 and 2021. The lack of use led to flat tyres, bad batteries and profitable auto repair businesses nationwide.
Can Often Be Started From: £20K
2. Cleaning Franchises
If the COVID pandemic taught us anything, having been closely followed by Monkey pox and Strep A serving as reminders, demand for cleaning – both domestic and commercial – will never cease. The biggest reason during the COVID pandemic for businesses closing was because of the risk of spreading the virus. During this, demand for workplace hygiene solutions and cleaning went through the roof. Cleaning services was a lifeline for many businesses many of which were really close to closing their doors for good.
Just several months on, conflict in Ukraine led to sustained recession across Europe with a cost of living crisis hitting hard. Despite this, many businesses are still required to comply with health and safety laws. Yes domestic cleaning will likely decline as homeowners try to save money and opt to clean houses themselves, but there are numerous instances where cleaning franchises will thrive.
- During pandemics like the COVID pandemic
- End of tenancy and property maintainer cleaning franchises
- Workplace cleaning and health/safety hygiene
A lot of types of cleaning franchises, especially oven cleaning, will operate on a repeat business basis where clients will book cleans in advance. This enables franchisees to build a strong relationship with clients and ultimately this leads to not just a business relationship between franchisee and client but on a more personal level. If you regularly use the same cleaner, it can become more difficult to tell them you cannot afford their services and have to let them go. This is in contrast to if a different cleaner was used every clean. As a result, even during recession, both solo and management cleaning franchises can still operate effectively.
Can Often Be Started From: £5K
3. Coffee Franchises
Coffee shop franchises are recession proof, because no matter how difficult the economy becomes, people will still find the change in their pocket to get a drink when out and about. Coffee has formed a major part of many people’s routines and it is a habit that is hard to break out of. Many commuters waiting for their bus or train at a transport hub will likely opt for a coffee while they wait. Mobile coffee franchises sat at train stations continue to see queues form from busy commuters finding time during their travels for a hot drink to keep them going. Regardless of how hard the economy gets hit, coffee shops will still see a regular flow of customers. No matter how hard the economy gets hit, people will meet up and friends will get together and sit down for a coffee.
There are many types of coffee franchises out there. A lot of them are able to offer flexibility when it comes to how the franchisee can operate the business. Some coffee brands will offer franchisees the choice of setups, be it a high street store or a coffee van. Kiosks are becoming a popular option for high footfall areas such as rail stations and shopping centres making coffee an easy to reach sector for both new and experienced entrepreneurs.
Can Often Be Started From: £20K Coffee Van, £50K Kiosk, £150K Storefront Retail
4. Health and Beauty Franchises
The COVID pandemic saw a lot of people in lockdown attempting to recreate salon results at their own home when it came to their appearance. Many men took hair cuts into their own hands whilst gym closures sparked an interest in fitness from home. Frankly for many, the home-based salon approach left them with grizzly results. Along came a relief when barbershops and gyms could finally open, no longer having to savour the daily walk.
The point of this is people simply cannot go without health and beauty businesses. Salons, dentists you name it. During the said pandemic, many salon franchises diversified to keep their revenue streams flowing by doing home visits when lockdown restrictions were eased. Even during recession, people will continue to need salons, barbershops and gyms for the sake of their appearance.
Because massage and salon franchises have diversified to offer mobile services, overheads can be kept to a minimum in that they do not need their own physical premises anymore. Health and beauty franchises can definitely be operated during a recession, however it is solo businesses that are more likely to struggle. Franchise networks are considerably supportive, from both franchise associations, the franchisor and other franchisees, and will often find it less destructive to diversify the offering to keep up with not only trends but recessions and economic decline too.
Can Often Be Started From: £15K Mobile, £50K Premises
5. Care Franchises
Over the last few decades, healthcare has rapidly grown becoming more advanced with considerable breakthroughs in research and development. An ageing population, people in the UK live longer now than ever before. Thanks to the development of cures and vaccines for various illnesses, treatments for some types of cancers and diseases, people are really benefitting from the healthcare sector.
There are many types of care franchises, and most of which are recession proof business models. Thanks to the increasing population, demand for care is at an all time high. More and more care homes are popping up across the country and more and more people are now living to see care homes. In the same manner, franchising has helped home care businesses rapidly expand and provide round the clock support for people in their owns home.
Care home and domiciliary care franchises are now in demand more than ever before and are a truly recession proof business which will never stop being in demand.
Home care franchises are often operated on a management basis, meaning you won’t need any care worker experience. Your role will be ensuring the business runs effectively. Your role as a care franchisee will also be employing care workers to keep up with pace as your business grows.
There are many other care related franchises too, many of which are recession proof. From children’s NLP to disability related franchises.
Can Often Be Started From: £20K
6. Food Franchises
Another type of recession and pandemic proof business is food franchises. Similar to coffee shop and mobile coffee franchises, food franchises have been able to sustain both recessions and pandemics. During the COVID-19 pandemic, it was thanks to the many food delivery companies like Uber and Just Eat, that businesses could continue to operate and thrive through these revenue streams. Many businesses were able to increase their prices in line with demand through lockdown actually making more money.
Takeaways can cost as little as £10 per head and it can be difficult to turn your head away from one when you’ve had a busy day at work or have come home late for whatever reason. Regardless of the economy, people do still find a way to fit in a takeaway, a coffee or a cheeky pizza into their week. And with many food franchises like Dominos, Papa John’s and McDonald’s announcing regular offers and loyalty apps to keep fans hungry for more, demand for food franchises shows no sign of stopping.
Most food franchises will require a premises, usually at least £100k+ investment (which includes fit-out, store opening and marketing) and a similar figure in working capital, banks can lend up to 70% of the investment subject to good finance and a sound business plan. High street food and restaurant franchises are usually high end franchises but some you may find with an investment of less than 6 figures. For example mobile pizza, some Italian food franchises and mobile coffee are the ones to look out for if you’re on a budget.
Can Often Be Started From: £20K
7. B2B Franchises
B2B is quite a big franchise sector, but even during recession, businesses continue to operate normally. Possibly adjusting their own operating practices depending on the market, most businesses do trundle on. B2B franchises are businesses which operate with their main clients being other businesses. Some good examples of recession-proof B2B businesses include:
- Windscreen repair franchises – operating in the commercial sector for business fleets, from funeral limos and hearses to trucks and coaches.
- Business advice and coaching franchises – if a business is struggling, they’ll look for guidance from other businesses and consultants
- Commercial cleaning franchises – from window cleaning, end of tenancy maintenance to office hygiene, businesses will have a bigger budget to spend on their building presentation than the consumer counterpart.
Can Often Be Started From: £20K
8. Courier Franchises
Courier franchises don’t just include parcel and pallet distribution, courier businesses also include the likes of food delivery franchises and multi vehicle haulier businesses. The number of different food delivery businesses out there continues to rise. You’ve got well known brands like Just Eat and Uber Eats, whilst others like Deliveroo and One Delivery. However there are a number of food delivery franchises establishing themselves amongst the market. At first glance the more there are the more competition, but each have their own special offers and when it comes to ordering, one of the biggest factors people take in to consideration is the cost and speed of delivery. The cheaper the delivery, the faster the service, these are all competing factors towards which company a person will use. And the same applies to any other courier related business.
Courier businesses are great franchises because the territories are incredibly dense, enabling the franchisor to maximise the number of territories and their own turnover. The dense territories are beneficial for franchisees because there is more active customer potential. For example out of a 100,000 household territory, more of those are likely to get a takeaway or two each month compared to an oven clean or attend a sports club franchise, the latter two of which may require a bigger territory to cope with demand during a recession or periods out of season.
Can Often Be Started From: £10K
9. Computer and Internet Franchises
Internet based businesses are recession proof because there are usually no limitations on territory or your operating location. Often run from home, your main overheads will be having an affordable broadband/internet and landline/mobile tariff. Electricity, water and heating will come under your home running bills and you can take various steps to minimise these expenses through cost saving (warmer clothes, kettle tips etc).
Can Often Be Started From: £5K
10. Accounting and Finance Franchises
Most internet businesses are recession proof in that you could (subject to franchise restrictions) accept customers from places or countries where recession is less of an issue. Good examples include web development, marketing and virtual assistant franchises. Some types of internet-based franchises which may struggle in a recession could include travel businesses and ecommerce which depend highly on larger spends or impulse purchases. That’s not to say that these businesses aren’t recession proof, because franchisors will make every effort to ensure that their franchisees are able to continue trading effectively as possible.
Possibly even operational from home, finance and accountancy franchises usually operate in the B2B sector. Accounting is a time consuming and sometimes tedious job that many businesses can’t spare the time to do. Sometimes it can be cheaper to outsource accountancy than have an in house accountant. Accountancy, bookkeeping and finance franchises continue to operate in the market without being affected too badly by economic downturn and recession. SME businesses are more likely to use an accountant and even if they don’t, pandemics and recessions can lead to furloughed staff from which the business owner would then turn to more cost effective means for accountancy – ie accounting firms and franchises.
Accountancy franchises may well be office based and require a premises for the best presentation to prospective clients, but there are a number of home based accountancy franchises, many of which can be run as a solo operator.
Can Often Be Started From: £20K
Recession Proof Franchises: In Summary
Thanks to the supportive framework that is franchising, many franchisors are able to offer support for their franchisees during recession. Where you’d be alone if you had started up by yourself, franchising means you’re part of a family. And families stick together. In the past, franchisors have helped franchisees in many ways, from changing the way the franchisees operate to improve sustainability or turnover. Especially cutting overheads. A lot of franchisors have helped their franchisees during recessions by cutting or capping the monthly franchise fees, or increasing advertising nationally to help increase awareness.
These are just some of the types of recession proof franchises available in the UK. There are over 1,000 franchise opportunities out there covering a wide range of sectors. Every well established franchise will make the effort to help their franchisees survive recessions and pandemics. Franchise associations, franchise consultants and franchisors are always on hand to help franchisees during challenging times, and it is a relief to know this support is available to you when you’re a franchisee within a franchise network.