We all know that during a recession when a slow economy casts uncertainty over your job and finances, being a franchisee gives you a chance to be your own boss and enjoy a flexible schedule. Yet, not many of us take that path due to one major concern—money or rather, the lack thereof. As a franchise owner myself, I can relate to this. Higher investments and risks of running a business during a recession tied me to a hectic corporate life for a while.
A casual meeting with a former coworker-turned successful entrepreneur made me realize that I could build my business, beat the economy, and secure my finances—without a hefty investment. That is when I found out about a few recession-resistant franchisees I could start within a budget of $50,000. While many of the options were recession-proof business models with low investment costs, there were pros and cons to weigh.
Affordable Recession-Resistant Franchises (Under 50K) to Consider
The current slowdown in the economy this year due to the ongoing pandemic is something that we had never witnessed before. The fear of contracting the virus and social distancing guidelines have affected every business, including franchisees. The definition of recession-proof businesses is changing fast as some of the most successful franchises in the fast-food industry that did well during the past recessions are getting hit by declining sales during the present times. So, before you start looking for low-cost franchises that would ride the recession wave, you need to evaluate how they are faring under the pandemic by adopting new ways to run their businesses successfully. You should be searching for recession-resistant franchises that can operate successfully while abiding by current health and safety restrictions.
Based on these parameters, here are my picks on recession-resistant franchises (under 50k) that you can consider:
Children’s Activities Franchise
With schools resorting to online classes during the pandemic, parents have been increasingly looking for ways to enhance their children’s indoor lives. The cancellation of after-school classes and summer camps has further led to an increased demand for online activities to keep kids occupied as well as happy and healthy. This has created a huge opportunity for franchises—such as Snapology, KidCreate Studio, and Bricks4Kidz—involved in children’s activities such as STEM-based education, craft and art, dance, fitness, yoga, and others.
Pro: Most of these franchisees have mobile businesses which means you need not worry about setting up a brick-and-mortar store. Following social distancing guidelines, these franchises have seamlessly moved to virtual classrooms and workshops. With an average investment cost ranging between $20,000 and $50,000, you can easily start your own business without burning a hole in your pocket.
Con: With their limited attention span, it is difficult to keep kids engaged in virtual classrooms. Remote learning offers an immediate solution to address social distancing concerns. However, prolonged social distancing mandates can take a toll on a child’s health, leading parents to prefer the outdoor environment over increased screen time. This can cause a decrease in future enrollments, affecting your business.
Grocery and Restaurant Delivery Franchise
In March of this year, when coronavirus was at its peak, people stopped making quick trips to grocery stores and restaurants due to the fear of contracting the virus. This led to an increased demand for grocery delivery services such as Peapod, InstaCart, Shipt, and others. Yet, their services could not match the steep demand from customers who had to wait for at least a week to get their online orders delivered. Restaurants, too, fell short of delivery persons to drop-off orders. For grocery and restaurant delivery franchises, this gap between the demand and supply meant a significant business opportunity.
Pro: With a grocery and restaurant delivery franchise, you are getting the required support in the form of licenses and permits, GPS and payment processing software, drivers’ training, and others. This takes away most of your worries regarding setting up the business that requires an investment cost of $35,000 to $40,000. You have the flexibility to work from home as well.
Con: With prolonged social distancing guidelines, you will face stiff competition from the extensive and robust delivery networks of e-commerce and retail giants. Restaurants will also prefer employing their workers for delivery than working on a profit-sharing model with a delivery franchise.
Real Estate Franchise
An economic downturn rocks the real estate market too. Yet, the investments often yield potentially better returns than the ones in the volatile stock market. During this time, homeowners facing job losses and foreclosures tend to sell off their distressed properties quickly, letting you buy, rehab, and sell them with higher margins.
Pro: Unlike other franchises that risk losing customers over prolonged social distancing, real estate investing has restructured itself well, with the entire business being conducted remotely. You can easily tour a distressed home virtually and have closing documents signed electronically.
Con: While starting as a real estate investing franchise, you need professional training to learn the ropes of the business.
Recession-Resistant Franchises (Under 50k)
|Franchise Type||Investment Cost||Pro||Con|
|Children’s activities||$20,000-$50,000||Mobile business, easily conducted through online classrooms and workshops||Difficult to keep children engaged virtually for a prolonged time; parents may prefer outdoor time over screen time|
|Grocery and restaurant delivery||$35,000-$40,000||Flexibility to run a business from home||Stiff competition from robust delivery networks of e-commerce and retail giants|
|Real estate||$30,000 and above||Remote work option, solid networking support to stay ahead of the competition||Need for comprehensive training|
Comparing the above options, real estate investing appears to be an affordable recession-resistant franchise (under 50k) where the only downside is the need for training that you can easily receive with the help of a trusted team.
A Low-Cost Franchise Option That is Truly Recession-Resistant
Once I found real estate investing to be an affordable, recession-resistant franchise, my next concern was the lack of knowledge about the market. I was worried that this would risk my initial investment amount too. Thankfully, being a part of the nationwide network of independently owned and operated HomeVestors® franchises, I was able to access the much-required training, tools, marketing, and support. Also, I had the choice of starting as an associate franchisee with fewer up-front costs or just take the plunge and become a full-time franchisee owner. I chose the latter and have not regretted it. As a HomeVestors® franchisee, I gained access to:
- Comprehensive training: The initial week-long training helped me understand the ins and outs of the business and provided me with a solid foundation.
- Proprietary Tools: The proprietary software in an all-in-one platform that helps me track and manage leads, list properties to sell, evaluate properties, and even connect to hard money lenders to finance my deals.
- Qualified leads: The nationally-known and trusted “We Buy Ugly Houses®” team provides me with qualified leads of distressed homeowners who are motivated to sell.
- Mentorship: As a new franchisee, I was connected to a seasoned investor who was my personal Development Agent, guiding me through the deals and helping me reach my investment goals.
With the extensive support and tools provided by the HomeVestors® team, I was able to successfully establish my real estate investing business.
If you, too, are interested in starting a low-cost, recession-resistant franchise, call HomeVestors® today.
Each franchise office is independently owned and operated.
HomeVestors of America® is the nation’s only real estate investing franchise, providing business opportunities to real estate and investment professionals across the nation.