Fitness enthusiasts will be ready to join a gym because they are fed up with working out alone at home. As a result, smaller and specialized fitness services will be in demand.

By Lori Karpman

Since the start of 2020, Canada has experienced a low unemployment rate. Then COVID-19 struck, and many had to stop working to care for their families, were put on leave or laid off, and felt the pain of the stock market crash. During and after this pandemic, companies adopted a “lean and medium” strategy to recover their losses. One trend is to replace senior and middle managers with younger, cheaper talent. These displaced managers and professionals are on the hunt for opportunities, and franchising may just be the answer for many of them.

While some franchises have had to pause and pivot in the midst of the crisis, industries that provide goods or services that meet basic needs are performing well and even thriving during an economic downturn. In fact, during tough times, franchising has always worked well, as fear of job loss and financial insecurity drives people to turn to self-employment.

How to choose a recession-proof industry

As we know, no industry is really immune to the recession; however, some sectors are more resilient than others. Some factors to consider when finding a franchise opportunity include:

Proof of concept in several markets

The reason people buy franchises is because the company has a track record. What needs to be ensured is that the business model has been tested in a variety of different geographic or demographic markets. This is usually a feature of more established brands.

When consumers need to cut their budgets, they shift from “wants” to buying only “needs”.

A product or service that is a “need” versus a “want”

When consumers need to cut their budgets, they shift from “wants” to buying only “needs”. Thus, it must be determined whether the franchise is selling a product or service “need” or “want”.

A stable and / or growing market sector

When looking for a franchise, one should consider a stable and / or growing market segment. This data can be based on industry demographic or geographic markets.

Previous experience with a recession

You have to look at how the company fared during the 2008-10 recession. It is important to know how the recession affected the sales and the basic results of the franchise.

Solid economy at the unit level

While a company’s sales or gross income are important KPIs, net operating income and profits are critical numbers to study. Some brands have high sales results but low margins resulting in low or no profits.

Key Indicators in Franchise Disclosure Papers

The Franchise Information Document (FDD) provides valuable information about the management team and its expertise, bankruptcies or litigation against principals or the brand, unit turnover rate and the number of multi-franchise owners. -units. The latter is a key indicator of success because franchisees do not buy multiples of underperforming brands.

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