In February 2020, we published an article titled, Is There Really Such a Thing as a Recession-Proof Franchise? While we would like to say that this was prescient, the reality is that it was simply a coincidence. However, what is not a coincidence is that the Franchise Business Review recently published a list of its Top 100 Recession-Proof Franchises. As the publication explains, the list “look[s] at today’s top franchise brands with the highest owner satisfaction and the greatest opportunity to perform in these historic times.”
Franchise reviews like the Top 100 Recession-Proof Franchises are a dime a dozen. They all come with caveats, and some are even pay-for-play. With regard to its list of recession-proof franchises, Franchise Business Review writes:
“From our perspective, franchisee satisfaction is one of the most important factors to consider before investing in any franchise opportunity. Not only do the following companies have outstanding satisfaction among their owners, but we feel they hold a strong advantage to out perform [sic] their competitors in the years ahead.”
The site does not appear to include any additional information regarding the criteria for inclusion in the Top 100 Recession-Proof franchises. Thus, aside from franchisee satisfaction, it isn’t clear on what basis these franchises are being classified as “recession-proof” (and it also isn’t entirely clear how owner satisfaction translates to economic imperviousness). With this in mind, like most franchise reviews, it appears that the Top 100 Recession-Proof Franchises should be taken with a grain of salt.
Categories of “Recession-Proof” Franchises
The Franchise Business Review’s list includes franchises in 18 categories. Some of these categories are quite broad (i.e. Food), and some actually haven’t fared all that well during the pandemic (i.e. casual dining restaurants—which took a major hit last year and are still largely struggling to recover). The categories included on the list are:
- Advertising & Sales
- Business Services
- Child Services
- Cleaning & Maintenance
- Finance & Tax
- Health & Beauty
- Home Services
- Pet Services
- Real Estate
- Senior Care
- Sports & Recreation
- Travel & Hospitality
We covered some of these categories when we discussed the topic of recession-proof franchises (if there really is such a thing) last February. Specifically, we focused on Automotive, Hair Care (a subcategory of Health & Beauty), Resale (a subcategory of Retail), Senior Care and Restoration Services (a subcategory of Services). As we said at the time, these types of franchises all provide goods and services that most people would classify as “necessary,” and thus they may be more likely to survive even if people have less disposable income to spend.
Should You Buy a “Recession-Proof” Franchise?
When buying a franchise, there are numerous factors to consider. While stability is an important factor, it is ultimately just one of many—and, ultimately, there is no guarantee that any franchise will survive. If you are thinking about buying a franchise in any of the categories listed above, you should be sure to conduct thorough due diligence (not solely rely on third-party franchise reviews), and you should have the Franchise Disclosure Document (FDD) and franchise agreement reviewed by an experienced franchise attorney.
Are you thinking about buying a franchise? If so, we can help you make an informed decision. Call 202-293-3947 or contact us online for a free and confidential consultation.