Recession, what recession? Starting a business can be less of a gamble with a franchise

Franchising a business, like buying a franchise, involves the investment of money in a vehicle likely - but not certain - to deliver healthy returns

Franchising is an investment for both franchisor and franchisee. Interestingly, it is now beginning to appear as one of the least risky available.

I needn't catalogue the precariousness of most investments today. There used to be a time when selling or buying a business - even one offering a nationally recognised brand, proven business formula, initial training and ongoing support - was still riskier than an investment in real estate or a balanced portfolio. Now, franchising's formula of shared risk and gain, and its natural conservatism (a business must be proven before it can be franchised), makes it an attractive option for well-informed punters and well-advised businesses. Not every franchise is destined for success - far from it. However, those businesses that have demonstrated that their business model works, has staying power and can be successfully replicated with proper support, make sound investments.

Allow me to qualify what I mean by 'staying power'. Businesses built upon unsustainable trends or propositions unsuited to a recession (think overseas properties) may work as cut-and-run enterprises, but tend to make disastrous franchises. Franchise systems are composed of a web of like businesses - when the central concept fails, the bloodshed is all the worst. Conversely, when a business is based upon a sound, durable, recession-proof proposition, the resulting franchise system, when well-executed, can last a lifetime. Think McDonald's.

What propositions are recession-proof? You may be surprised at the list of commonly accepted recession-proof businesses:

  • Vehicle repair & maintenance
  • Tax services
  • Security/Alarm services companies
  • Pharmaceuticals
  • Necessities (food/grocery stores/chain)
  • Medical Services/Health care (including health care services for pets)
  • Life coaching
  • Insurance
  • Home repair & maintenance
  • High end services for the wealthy
  • Gambling
  • Funeral homes
  • Entertainment
  • Energy provision, efficiency and savings
  • Education
  • Debt collection
  • Cosmetics
  • Career/Job search
  • Auctions
  • Air Conditioning/Heating
  • Alcohol

Such businesses are not guaranteed to succeed in this downturn but have been historically shown to resist downturns better than others. As society and technology changes, businesses may be added or removed from this list. For example, fitness clubs for mature ladies are doing well, while tobacco sales - once a sure thing - are falling.

If you are looking to invest in a business that may generate good returns for you while providing you with ample engagement, the above list may help guide your research. If you have a business that has proved its resilience, staying power and appeal, then seek professional advice on franchising. It is likely to be the most effective way for your business to expand and the smartest investment you may make.