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23 Sep
Future of Franchising in a Down Economy

Posted by Mark Dobson On September - 23 - 2011

Franchising has developed into a driving force of the global economy.

It presents tested and tried commercial business models to businessmen who deliver products and services locally. These entrepreneurs benefit from the reputation and systems from a recognized brand. A franchise integrates the expertise and experience of a big company with the ambition of an entrepreneur, resulting in a mutually beneficial partnership.

Not surprisingly, franchising is a rapidly growing option especially in times of changing demographics, some industries becoming non-viable and many production units moving offshore. This puts the unemployment at an average 10%, making it necessary for those without a job to find an alternate way to earn their living. Franchising presents a potential way to own a business.

According to The Economic Impact of Franchised Businesses report, Vol. 3, prepared for the International Franchise Association Educational Foundation, there are over 825,000 franchise businesses spread over 300 different industries. These have created over 18 million jobs and generated over $2.1 trillion to the U.S. economy.   The franchise industry accounts for approximately 40% of all retail sales in the US.

Here are some interesting statistics related to franchising in Canada:

  • Canada has the second highest franchising industry in the world, after the US
  • Franchising sees over 100 billion dollars in annual sales
  • There are approximately 1.5   million Canadians working in franchised industries.
  • There are almost 76,000 franchised businesses in Canada
  • Among franchises started in the last five years, 86 % still belong to the same owner and 97 % are still in business.

In a “down” economy that is ever fluctuating, those in the franchise industry strongly support franchising as the better option compared to worrying about the stability of a job.

Interestingly, the franchising industry continues to not only survive, but also thrive even during an economic recession. This is because employees who have been laid off work or are stagnating in their jobs are eager to buy a franchise. In a brand-conscious market where people seek more value for money, the natural tendency is to look for lucrative and affordable business opportunities. Since franchised business can deliver the same quality, many people tend to support them. This further boosts demand and drives sales, opening new opportunities.

When the franchisor is an established international brand and a market leader, the franchisee can look forward to a proven system. Among franchise opportunities, the most sought after is the master franchise opportunity where investors can look forward to earning residual income for several years down the line.   There is potential for long term success and instead of just one franchise,   a master franchise opportunity allows the franchisee to buy the rights to a franchise brand and develop it in their region. This is especially beneficial to those who have been laid off from management positions as it gives them the opportunity of a lifetime to run their own business without the related hassles of establishing a startup.

Some of the most popular recession-proof categories that boom in a down economy are:

  • Franchises related to food are an investor’s favorite.  The customer profile here consists of people who want variety, but not the exorbitant prices of the stylish restaurants. Hence the fast-casual dining franchise is a winner.
  • Another high turnover franchise is the handyman business. High property prices have resulted in people holding on to their properties. These people also need to ensure proper maintenance. Almost every franchise in this segment has a flourishing business.
    • Top companies in the finance industry are offering financial service franchises because it makes sense for them to outsource tax return filing and payroll maintenance when business is slow. Some franchise services offer services similar to banks at a far more affordable investment.

Franchising is a critical part of the global economy. By owning a franchise, the entrepreneur is buying into a proven business model.  When an economic recession grips the globe, franchising is mutually beneficial for both parties involved.  With a high success rate, loans are easier to get than for a start-up standalone business. Moreover, there is no lack of opportunities to suit every investment budget.  With the franchisor’s constant support, it is practically like being handed a “ready-made” business on a plate.

To learn about WSI Master Program, contact us at

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Category: Business Opportunity, Franchise Development
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About the author: Mark Dobson
Mark Dobson, our VP Franchise Development has been with WSI since its inception in 1995. Mark has an extensive background in the development of human potential and the understanding of behavioral more


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