How Might a Recession Affect Your Franchise Ownership Plans

Jun 14, 2022 | Blog

Will we or won’t we? The economy continues to send mixed signals, with unemployment at a record low percentage, but inflation at record highs. Everything is still framed in the recovery period prompted by the pandemic, making this the strangest of times, to say the least. As of right now, the nation is holding its collective breath in wondering whether or not we’ll enter a recession.
How Might a Recession Affect Your Franchise Ownership Plans?
But, even if we do, would a recession bring about negative consequences on those considering franchise ownership? It’s time to review some facts…

Experts Remain Divided

The heads of the major investment banks sure like to keep us guessing about the possibility of a recession. At the beginning of June, the CEO of JPMorgan Chase, Jamie Dimon, went on the record with his opinion, stating that not only was a recession imminent, but he likened the potential effect to a “hurricane,” stating that investors should “brace themselves.” This sentiment has been echoed by other industry titans such as Tesla’s Elon Musk. It would appear the voices sounding the doom and gloom alarm are quite confident, but there are opposing views. Bank of America CEO Brian Moynihan is more optimistic, taking a wait-and-see approach in stating, “our team believes we’ll grow this year and next year.” Of all the personalities weighing in on the possibility of a recession, perhaps the CEO of Morgan Stanley, James Gorman, deserves the biggest groan, as he stated that the chances for a downturn are roughly “50-50.” Yep, he really went out on a limb there!

Recessions Aren’t All Bad

Were the U.S. to enter a recession period, the news isn’t all bad. Perhaps the biggest harm would be a pullback from consumers, causing their confidence to lessen – though this doesn’t seem to be the case right now. For every action, there’s always an opposite reaction, meaning there are a few upsides to dealing with a recessionary economy. First off, it may halt inflation’s climb and halt it right in its tracks. In a low-opportunity market, pricing and costs tend to come down to match consumer sentiment. Gas prices, anyone? Though lending tends to slow up, it’s still an opportunity to build savings as the Fed raises rates. It’s also a time of slower, measured moves that allow time and focus for future prospects.

Recession-Resistors

There are more than a few franchise categories that bill themselves as “recession-resistant” or “recession-proof” and for good reason. These business models tend to thrive, even in times of economic downturn. Examples include personal services, cleaning franchises, restoration/repair, and even senior home care are but a few opportunities that remain buoyant despite economic conditions.

The bottom line is this – nobody, including the so-called experts, can accurately predict when the U.S. might enter a period of recession. Or, even if we do, how bad it may be. Just as many see a recession as a time to panic, smart investors see it as an opportunity. The franchising industry has seen this all before, perhaps no better example than the great recession that kicked off in 2008. While the residential home loan market was completely upended, many other business categories continued to flourish, including several sectors of the franchising industry.

If you’re worried about the current economic state of things and whether we’ll actually see a recession or not, there’s no need to panic or put off your entrepreneurial dreams. If your goal is to establish small business ownership through franchising, you can still get great advice from FranNet of DFW & Oklahoma with our no-cost, no-obligation sessions. We have helped hundreds of entrepreneurs become their own bosses and secure a future that belongs solely to them. And we can also help you find the funding resources you need to secure financing for your own small business. We’d love to introduce you to a whole new world of possibilities through franchise ownership. Getting started with your personal entrepreneurial assessment is easy – just ask us how!