Buying a Franchise in Slow Economy. Safe Enough?


During a slow economy, will be buying a franchise worth risk-taking? This question haunts every naive businessman willing to invest in franchising but highly skeptical about the ongoing recession and slower economic times. 

Why have people in the past invested in franchising when the economy was slow? 

History has witnessed an interesting phenomenon of growth in the franchise sector during the recession, while the rest of the economy was downsizing. While professional were always under the cloud of uncertainty of losing their jobs, some business enthusiastic people looked out for opportunities elsewhere such as buying a franchise. They did research on businesses that survived during recession and were amazed to find out how franchising has been recession-resistant. It’s been 10 years since the last recession in the United States that not affected America but the entire globe. Fortunately, the world along with the USA has recovered from this dark phase in terms of economy and franchise business nonetheless has skyrocketed in the past decade.

Successful franchise owners have learned from the past economic downturns. During the 2008 recession, I had an opportunity to attend a business event, mostly attended by local business professionals. The event to be very honest was quite depressing as everyone was whining about how bad the economy was and how their businesses were getting crushed upon by the recession. Meanwhile, I was introduced to one of the real estate agents. Considering the factor that property rates were declining and that the room was already obsessed with the impacts of the recession, I was pretty unsure of asking this obvious question – “How’s business?” However, I was quite surprised by this young man’s response. He had replied that he was having a great year. Out of curiosity, I asked him if he were serious as the recession had hit the real estate pretty hard. He went on to say this which I can never forget – “I absolutely refuse to participate in the recession!”

When other business owners are depressed about how the downsizing of their enterprises and people are constantly losing jobs; there were a few thought leaders who were bringing best practices to the tables and finding ways to get more eyeballs. They were instead busy establishing business networking with potential contacts. They managed to generate referrals by talking about how franchising offers failsafe opportunities.

The striking example is Domino’s Pizza, which continues to defy the slow economy. 

Did you know Domino’s stock has gone up to 5000% since 2008 recession? 

dominos stock buying a franchise

At one point in time, Domino’s was highly criticized for lousy pizza and mediocre services. When Patrick Doyle became the CEO of this franchise brand, he ensured to transform this legacy company into a technology-enabled category-disrupting brand. The brand was reinvigorated. While the delivery service was among the top changes to do, the quality of the pizza was also reconsidered. Doyle launched an ad campaign that has become legendary down the line for its boldness. In the campaign, the brand openly shared the customers’ feedback: “worst pizza I ever had”; “the sauce tastes like ketchup”; “the crust tastes like cardboard.” Doyle himself appeared in the ads and acknowledged the criticism gracefully and promised to “work days, nights, and weekends” to get better. 

The brand introduced the ‘deliver within 30 minutes else order is free. In order to ensure their promise, they leveraged the cutting edge technology and introduced ‘track your order’ facility for their customers. Domino’s Pizza, in the past decade, has invested most of its time in exploring every digital transformation aspects to deliver pizza. The pizza franchise has managed to woo millennials with some of the coolest features. For instance, now customers will be able to place and track orders on their cars’ touchscreen, apart from locating the nearest store. 

Among the company’s innovations:

  • An app to track a pizza is while en route to you
  • A Siri-like voice recognition system, nicknamed Dom
  • The ability to order on just about any digital device and platform

The right economy for buying a franchise

Franchising has eventually a larger part of the U.S. economy than most people might realize. 

  • 1 in every 7 U.S.A businesses is a franchise
  • There were 759236 franchise brands operating in the USA by 2018
  • An average of 300 new franchises open each year
  • Franchises support more than 13.2 million jobs
  • Franchises’ output in the U.S. economy is around $1.6 trillion, thereby contributing 5.8% to the country’s GDP

Proven business model 

During the slow-growth economy, even a small mistake can jeopardize the survival of an enterprise. The reason why franchising is the safest option to invest even during a bad economy is because of its proven business model.

buying a franchise slow economy infographics

What you should know before buying a franchise

  • Research carefully and finalize the franchise sector
  • Pick the vertical you believe you can enjoy working, which ensures success ultimately
  • Before starting a business, make sure you understand what’s involved. There are seasonal franchises that require you to work especially hard at certain times of the year
  • Delve through various research options such as browsing franchise information websites 
  • The websites will introduce you to a wide range of franchise opportunities and testimonials from their franchisees
  • Contact the franchisor via the contact details offered
  • Meet the franchisor if possible and see their operation and meet their people
  • Collect feedback from the people, which is important in any business building situation
  • Speak to franchisees and ask them about their business performance in an economic downturn
  • Explore the financial side. Check if the brand helps you in availing loan from any bank
  • Contact the Franchise Association and ask for contacts to accredited lawyers and banks, to assist guidance on the buying process

To conclude 

If you have decided to buy a franchise irrespective of the slow economy, you should choose the brand carefully. Always remember that the success in all economic conditions can only be achieved by passion and sheer hard work, whilst leveraging the proven franchise business system.

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