For the past year and a half, the U.S. has lived under the threat of a possible recession, though an official one has still yet to materialize. Defined as two consecutive quarters of negative economic growth, a recession can sometimes lead to downsizing and layoffs in Corporate America. For the time being, it appears as if the Fed’s aggressive sequence of interest rate hikes has strangled the runaway inflation we were dealing with for most of 2022 – the numbers have come down for 10 consecutive months. And unemployment has remained at historic lows.
While a recession is always possible, sometimes even looming ahead, how can franchise ownership protect you and a potential entrepreneurial future? As it turns out, in many ways indeed. FRANdata is one of the leading market intelligence-gathering firms specific to the franchising industry. In a recent blog from their Insights section, they pose the question of how franchise growth for franchisors and franchisees might look like in a time of recession. FranNet of DFW & Oklahoma has the highlights and takeaways you need to know.
The Next 18-24 Months
While we appear to be moving out and away from the pandemic recovery days, our household income, disposable income, and savings have declined somewhat. At the same time, our reliance on credit is reaching an all-time high. And it’s no secret that goods are up across the board, price-wise. FRANdata likens our current situation to a previous period of recession, which lasted from 1979-1987. As long as unemployment remains low, we’ll stay the course, enduring a slightly tougher economy in 2023 and a “pasta bowl” style recovery down the road.
Lending Environment
The majority of prospective franchisees require funding to secure the purchase of a business of their own and, under current conditions, lending has tightened somewhat. Franchisors will be looking for prospects with admirable credit histories – a point to keep in mind. Just the same, banks will be looking at franchise brands with a decent track record. Certain high-performing franchise sectors – including home improvement, mobile-based, childcare, and senior care, should be among the safest of choices.
If and When it Happens…
Even if a full-blown recession were to hit the U.S. in the next 18-24 months, those who chose franchising as a means to business ownership will enjoy some specific advantages over those who did not. That’s because franchisors offer their franchisees comprehensive training, ongoing support, and a proven business model to follow – one that’s been refined over time to optimize your chance for success. But you don’t just have to take FranNet of DFW & Oklahoma’s word for it – we’d be happy to put you in touch with several successful franchise owners themselves, for your own private validation session.
With the way the stock market is performing, corporate earnings reports, and a continuation of lowered inflation, the U.S. economy seems well-suited to handle what may come. The entrepreneurial sector is still quite viable and active, should you be interested in exploring a future all your own. You can read the full FRANdata Insights Blog by following this link.
Let’s Chat!
If you’d like to know more about franchise opportunities and ownership, please get in touch. FranNet of DFW & Oklahoma is uniquely qualified to match your potential with the possibilities that come from small business ownership through franchising. All you have to do is allow us to be your guide. Our no-cost, no-obligation consultations have helped hundreds of entrepreneurs in North Texas and Oklahoma secure a future that belongs to them and them alone. If you’d like to get started on your own entrepreneurial journey, we’d love to introduce you to a whole new world of possibilities through franchise ownership.