Are you finding that your supposedly recession-proof job might not be so stable? You are not alone. This pandemic-driven recession has caused millions of job cuts across sectors, so it’s probably time you started exploring your options. An economic crisis does not necessarily end your career. Rather, it can push you to become an entrepreneur.
Being an entrepreneur myself since the 90s, I can relate to the hesitancy—after all, it seems risky even in good times. But, if you go with a well-known franchise, you can reduce some of that risk. Let me take you through a few recession-proof franchise options that can help you take control of your career.
Top Recession-Proof Franchises Worth Buying Right Now
The COVID-19 led recession is unlike the ones that we have survived in the past. Social distancing mandates across the country have redefined the way businesses function. This, in turn, has thrown many business owners off track, especially the ones in the food and hospitality sectors. You want to avoid these high-risk industries when choosing your next career move.
So, before you think about the best recession-proof franchise to buy, you should consider the following:
- What is the product or service offered by the franchisee and what is its relevance under the present circumstance?
- Does the franchise offer goods or services that are in high demand during this pandemic?
- How is the franchise adapting to the new normal? Is it offering innovative ways to work remotely or maintain social distancing?
These questions can help you evaluate the potential for a franchise’s growth in the current economic environment. From there, you’ll want to consider the initial franchise investment, franchise fee, and liquid cash requirement. With all this in mind, here are my recommendations for a few franchises that have the potential to survive and thrive through the Coronavirus-led recession.
Mail, packaging & shipping franchise
The 2020 third-quarter fiscal report of the U.S. Postal Service revealed the recession-led uncertainty looming large over its business. The volume of mail delivered through the Postal Service has declined due to transportation restrictions along with increased labor costs. This has created opportunities for franchises like The UPS Store, World Options, Pak Mail, and Postal Connections to increase their operations during the pandemic. The same report found that Shipping and Packages revenue increased by $2.9 billion, on a volume increase of 708 million pieces, compared to the same quarter last year. It’s anticipated that these trends will continue as many Americans stay home and shop online due to the COVID-19 pandemic.
Pro: You are not just limited to postal and shipping services. You can diversify by offering mailbox rentals, notary services, packaging and labeling, passport and ID photos, document shredding, and scanning, printing, and faxing services.
Con: You need to have a brick-and-mortar store at a location that invites decent foot traffic but is also spacious enough to accommodate social distancing practices. You’ll want to be able to safely accommodate anyone visiting your store in-person or consider which services you can offer virtually or with as little contact as possible. Also, you’ll likely need to shell out anywhere between $100,000-$550,000 for setting up a franchisee store, with around $435,000 reserved as a franchisee fee and at least $60,000 in liquid assets.
Increased store sales and online orders reported by retailers such as Lowe’s and Home Depot reflects a growing trend of DIY and home improvement projects among people staying at home during the pandemic. The rising demand for gardening equipment, paint supplies, repair tools, and other home improvement products have created new business opportunities for franchises such as Ace Hardware.
Pro: As a local hardware store, you’ll likely be able to price according to the local market, unlike chain hardware stores that tend to mark their prices higher than others. Because of this, chances are you’ll gain a loyal customer base which leads to more sales.
Con: If you don’t have an existing store, the total investments can go beyond $1 million. Take an Ace Hardware franchise, for example, new owners can expect to pay a $5,000 franchise fee for the right to open their own location, and it could cost anywhere from a total of $272,500 to $1,574,230 to open the franchise, assuming it’s a new location.
Cleaning services franchise
People are worried about virus transmission these days, creating the need for cleaning and disinfecting anywhere people gather. Franchise cleaning businesses such as Servpro and Office Pride are witnessing a growing demand for routine deep-cleaning and special disinfecting services, both from the commercial and residential sectors.
Pro: With schools and businesses reopening, the need for frequent cleaning and sanitization of high-touch areas such as doorknobs has increased. These heightened cleaning standards are here to stay with growing demand from the hospitality, healthcare, retail, and food services industries.
Con: Your business depends on a cleaning crew you hire and train as per the franchisee training program. The efficiency and performance of the crew decide the growth of your business. With the equipment costing above $65,000, the franchise fee around $50,000, and the requirement of $40,000 as liquid cash, you are looking at a total investment in the range of $159,000-$213,000.
Business consulting franchise
During a recession, businesses switch to cost-saving strategies to maintain their bottom line. Though big corporates have their in-house and often expensive business consultants to guide them through an economic downturn, small businesses often prefer independent consultants to take help to keep their balance sheets in the black. This is where you can jump in as a business consulting franchise.
Pro: You can run the business from your home office—setting up meetings and giving presentations virtually. The market is huge with demands for consulting services from small mom-and-pop stores to even Fortune 500 companies who do not wish to continue with the expensive services of full-time business consultants on their payroll. The average cost of starting a business consulting franchisee is around $20,000, making it one of the low-cost franchise options.
Con: Though as a franchise owner, you will receive training and support, you are still required to have some prior knowledge and experience in business consulting to win your client’s confidence. Or else, you need to hire some professionals with the necessary experience. This would add up to your investment costs.
Real estate investing franchise
In between a recession and job losses, there has been an increase in foreclosure notices as distressed homeowners struggle to pay their mortgage. Though the federal government provided temporary relief to such homeowners through mortgage forbearance programs, these programs ended in August. So, you have ample opportunity to help out those distressed homeowners by starting a real estate investing franchise.
For real estate investing franchises, this creates an opportunity to buy those properties, rehab them, and sell with potentially solid margins. Interestingly, real estate investing franchisees are adapting fast to social distancing guidelines. Now, you can tour a property virtually and close a deal by e-signing the documents.
Pro: Unlike other franchise businesses, you need not have a physical office space at a prime location and wait for foot traffic to run the business. Also, you don’t need any prior knowledge or experience as a real estate investor. You can start the franchise on your own and work remotely from your home office while complying with the social distancing guidelines.
Irrespective of the economic weather, real estate investing provides you with growth opportunities. Though real estate investing is often perceived as a cost-intensive venture, you can start your franchise business with an initial fee of $39,000 and with fewer up-front costs. Also, you have the option to develop the business part-time before committing as a full-time franchisee.
Con: To lower your investing business risk, you need comprehensive training along with the access to qualified leads, tools, and network support to help establish your business.
Comparing 5 Recession-Proof Franchises
|Mail, Packaging, & Shipping
- Diversified services to offer
- Need for a physical store and customers visiting in-person
- Loyal customer base
- Social distancing through curbside pickup
- Increasing demand from various sectors
|Business Consulting Services
- Remote work
- Demand from small and large businesses
- Low-cost investment
- Prior knowledge and experience
|Real Estate Investing
- Remote work from a home office
- No need for prior knowledge or experience
- No need to hire professionals
- Option to start part-time with lower investment and fewer upfront costs
- Growth opportunities irrespective of the economy
- Need for comprehensive training and ongoing support
Historically, real estate investing has been able to consistently ride the ups and downs of the market. During a recession, when the value of investments on stocks and bonds witness a rapid decline and take a long time to recover, the returns on real estate investments appear less volatile. The rise in foreclosure notices due to unemployment makes distressed homeowners sell their properties, creating an inventory for real estate investors who can wholesale or flip properties for higher upside potential. The growing demand from homebuyers for properties away from the cities during this pandemic further boosts the real estate prices. That is why the real estate investing franchise seems to be a truly recession-proof franchise that helps you establish yourself as an entrepreneur. And, this is the reason why I chose to be a real estate investor three decades ago.
Join A Franchise Network That Provides Training, Tools & Ongoing Support
When I joined the nationwide network of independently owned and operated HomeVestors® franchise, it took a weight off my shoulders as I stopped worrying about getting training, qualified leads, tools, and support. As a part of the team, I got access to:
- Training: Though I was new to real estate investing, I had a week-long comprehensive real estate training to help me understand the ins and outs of the business. This included managing the buying process, evaluating the upside potential of a property, and implementing the right exit strategies.
- Qualified leads: The “We Buy Ugly Houses®” team ensures that I receive calls from distressed homeowners when they plan to sell their properties.
- Tools: Achieving my investment goals has been easy with the help of proprietary tech tools that add value to my business.
- Support: When I joined the team as a new investor, I had the much-needed ongoing support of a seasoned mentor who helped me close the deals confidently.
With the help of these resources and support from the HomeVestors® team, I was able to establish myself as a recession-proof franchise owner. If you, too, are interested in owning a real estate investing franchise and running your business independently, request information from HomeVestors® today!
Each franchise office is independently owned and operated.