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Starting a Franchise During a Recession
Building a business that thrives during tough times
Chris Wright
April 24, 2025
Welcome to Franzy Five, the 5-minute weekly summary of franchise news 👋.
This Week's Franzy Five:
💼 Starting a Business During a Recession? 5 Franchise Expert Tips
Uncertain times have always created unique opportunities for the bold. While others retreat, visionary entrepreneurs can find less competition, potentially lower costs, and consumers hungry for innovative solutions to new problems. The key is approaching your launch with the right strategies tailored for challenging economic landscapes.
Key Highlights:
Consider the franchise advantage instead of starting from scratch—you'll get training, support, and established brand recognition as your safety net. Senior Helpers, a senior care franchise, boasts a remarkable 97% of franchisees who would recommend the franchise to others.
Get creative with financing options by first determining what you can realistically afford, then exploring the many available funding sources. Tools like financing calculators can help map out possibilities you might not have considered.
Look for low-investment opportunities that don't require physical locations or extensive inventory. Bee Organized, a professional home organizing business, offers a turnkey model without the overhead of office space.
Focus on recession-resistant industries that maintain demand regardless of economic conditions. Auto repair franchises like Christian Brothers Automotive thrive during downturns because people repair rather than replace vehicles.
Build a strong support network and cultivate the grit needed to weather challenges. The entrepreneurs who succeed through downturns are those who combine thorough research with resilience and adaptability.
👉️ Why It Matters:
Economic uncertainty is a constant—even in booming times. Your entrepreneurial dreams shouldn't be shelved due to market jitters. With strategic planning, thorough research, and the right business model, launching during a recession can position you for substantial growth when the economy rebounds. The key is making smart, data-driven decisions rather than emotional ones.
💵 What It Actually Costs to Franchise Your Business
Thinking about franchising your business? Before you start dreaming about expanding your empire, let's talk money. Franchising typically costs between $15,000 and $100,000 to get started, though that figure can soar to $300,000 depending on your industry and goals.
Key Highlights:
Operations manual development is crucial for consistency across locations and can cost thousands if professionally developed—a worthwhile investment since incomplete manuals cause major headaches down the road.
Legal fees are unavoidable and can range from $10,000 to $50,000+ covering essentials like your Franchise Disclosure Document (FDD), franchise agreements, and state registrations.
Marketing expenses for attracting your first franchisees typically run between $100,000 and $150,000 in your first year—including website development, PR, brochures, and advertising campaigns.
Staffing your franchise company requires specialized talent, with a good franchise salesperson costing around $75,000 annually (plus benefits)—and remember, it can take months before they sell their first franchise.
Brand protection through trademarks and patents costs approximately $250 per trademark through the USPTO, plus additional fees if you need to establish separate legal entities to protect your intellectual property.
👉️ Why It Matters:
The financial investment you make upfront directly impacts how quickly and successfully you can scale. Cutting corners on essentials like legal documentation or operations manuals might save money initially but can lead to costly problems down the road. Working with experienced franchise consultants can actually save you tens of thousands by helping you avoid common pitfalls and negotiate better rates with service providers.
📊 How New Trade Policies Are Reshaping Franchise Operations
Recent surveys reveal growing economic anxiety that franchise owners need to watch closely. A whopping 85% of consumers are concerned about how tariffs will affect their finances and shopping behaviors—up four points just since February—while 72% worry about a recession hitting in the coming year.
Key Highlights:
83% of consumers plan to alter shopping habits in response to tariffs, with 31% intending to stock up before prices rise (up 8 points from February) and 32% planning to delay purchases (up 10 points).
Essential categories face the most scrutiny with consumers most worried about tariff impacts on groceries (60%), household goods (42%), and gasoline (40%)—nearly all categories saw increased concern from February to April.
Consumer understanding is improving with 40% now saying they fully grasp how tariffs affect prices, up from 34% in February, making transparency around pricing changes increasingly important.
Younger, more educated consumers are more likely to believe tariffs will harm the economy, but across all income groups, less than one-third think tariffs will benefit the economy.
👉️ Why It Matters:
For franchise owners, these shifts in consumer sentiment signal potential changes in purchasing behavior that could impact sales volumes and inventory management. Smart franchisees will communicate transparently about any necessary price increases while emphasizing value and exploring domestic sourcing alternatives where possible—all while preparing for possible belt-tightening from customers worried about recession.
🛡️ Trust & Transparency Drive Franchise Success
In the high-stakes world of franchising, trust isn't just a nice-to-have—it's your most critical asset. Franchises that prioritize transparency and ethical business practices aren't just doing the right thing; they're building the foundation for sustainable growth and profitability in an era where reputation travels at social media speed.
Key Highlights:
Harvard Business School study found that a one-star increase in online ratings leads to approximately 9% higher revenue, demonstrating the tangible financial impact of customer trust.
Transparency starts with leadership through clear financial disclosures, outlined operational expectations, and ensuring franchisees have the resources needed to succeed—creating a culture that flows down to customer interactions.
When franchisees feel heard and involved in decision-making processes, they develop a sense of ownership that drives commitment to brand standards and overall success.
Online reputation management is no longer optional—franchises that actively monitor review platforms, respond professionally to customer feedback, and address complaints promptly build stronger customer relationships and brand loyalty.
👉️ Why It Matters:
Beyond just attracting customers, a strong reputation influences franchise growth and investment opportunities. Potential franchisees want to join respected brands with success track records, while financial institutions consider reputation when evaluating financing. The long-term stability of your franchise depends on maintaining trust at every level—from customers to franchisees to investors.
✂️ Snippets
📈 Multi-Unit Franchisees Share Their Financial Success Strategies
Top multi-unit restaurant franchisees reveal their profitability secrets, from hourly monitoring of labor costs to smart inventory management systems. Robert Pina (37 Marco's Pizza) tracks metrics throughout the day, while Micah Sharpe (11 Penn Station) credits their "operator model" where GMs earn based on location performance—creating an ownership mentality at every store. The common thread? Watch your numbers religiously, incentivize ownership thinking, and don't be afraid to get hands-on with operations before outsourcing. (Source: Franchising.com)
🤖 AI Changes Everything: The New Rules for Franchise Evaluation
As AI democratizes business knowledge, smart franchise buyers are focusing on what can't be automated: community strength and brand adaptability. With 55% of organizations adopting AI tools, successful franchises balance tech efficiency with human connection—crucial as 82% of consumers still crave human interaction in their customer experiences. (So💼Starting a Business During a Recession? 5 Franchise Expert Tipsurce: Entrepreneur)
🏢 Franchise Facelift: Major Restaurant Brands Betting Big on Remodels
Restaurant franchises are going all-in on remodels as consumer traffic slows and operational costs soar. Burger King's "Sizzle" refresh—backed by a massive $2.2 billion investment—has already hit 90 locations, while Denny's is seeing 6% traffic lifts after their $250K-per-location refresh. With food costs up 40% and labor 35% over five years, these tech-enabled remodels aren't just nice-to-have—they're survival tactics in today's competitive market. (Source: NBC)
♻️ TGI Fridays CEO's Comeback Plan
Returning CEO Ray Blanchette has a four-part comeback plan for TGI Fridays after its November bankruptcy filing: boosting sales, revamping the menu (launching May 13), refocusing on "celebration," and targeting Gen Z foodies and millennials with young families. "This is a generation with a very high food IQ," says Blanchette of Gen Z, while betting the chain's lively atmosphere appeals to parents who "don't have to give up your entire sense of self" when dining with kids. With 391 restaurants across 41 countries, he's determined to put bankruptcy in the rearview and revitalize the iconic brand. (Source: Business Insider - Paywall)