Should a Recession Concern Future Franchisees?

For almost a year now, economic pundits in the U.S. have been playing the “will it or won’t it” game with whether we’ll see a recession in the next six to 12 months. Experts on both sides haven’t been able to build a consensus on the certainty of an economic downturn and the mixed signals our economy has been showing haven’t helped tip the scale one way or the other. In uncertain economic times, it may seem like a challenge to plan out your next career or business move with confidence. But franchising does give you many advantages in meeting this challenge.

Regardless of whether a recessionary period is in the cards for America, should an economic downturn be of concern to prospective franchisees and entrepreneurs? As far as the franchising industry is concerned, perhaps not. When you become your own boss, you gain the freedom, flexibility, and control to manage your own destiny – a luxury unavailable to workforces that serve at the pleasure of others. These employees are all just a layoff away from disaster, thanks to the risk of having their incomes completely cut off with no warning.

Our Recession-Resilient Business Models

The pandemic presented unprecedented challenges to our economy and wellbeing. But more than a few Unleashed Brands concepts weathered the storm with flying colors. Many of our franchise concepts showed their mettle during the pandemic by being recession resilient. The franchising industry – as well as nearly every other business sector – was facing a dire challenge at the outset of the COVID-19 outbreak. But all have come through on the other side of this obstacle with flying colors, including a few that actually gained ground when it comes to expansion and interest from franchisee prospects. During the past three-year period, these Unleashed brands saw the following increases in established units: Urban Air (+63.9%), Snapology (+72%), and Class 101 (+50%). Now that’s resiliency!

Advantages – Yes Advantages, of Franchising in a Recession

There’s always two sides of a coin, both good and bad outcomes to consider. And when it comes to franchise investigation and ownership during a recessionary period, there are still some positives to consider. Above all, franchise owners are no longer relying on their corporate employers to provide a security blanket in the form of a salary that’s subject to vanishing at the first sign of downsizing. Another advantage? Cheaper labor. During a recession – when employment tightens up – it’s much easier to hire employees, and at a lower wage price point. If and when interest rates slip again, lending opens up and borrowers can get more favorable loan terms. And commercial real estate – the staple of brick-and-mortar storefronts, tends to become less expensive in tighter times. Regardless of the external factors, franchisees can bask in the security of knowing that their proven business models, coupled with the relentless training and support of their respective brands, will carry them through.

Family Entertainment Budgets

According to one of the most recent studies of the average U.S. income, conducted by the U.S. Department of Labor Statistics, approximately 3%, or $250, is spent each month on family entertainment – more than they spend on clothing, education, and personal care expenditures. Meaning, that even when times are tougher, there’s still room in the budget for youth enrichment activities, such as the multiple franchise opportunities offered by Unleashed Brands. Moms and parents recognize the need for social interaction and skill-building and are willing to sacrifice elsewhere to keep their kids learning, playing and growing.  

Some of the latest indicators seem to reveal that, if there’s a recession, it won’t exactly be a rough one. Among the latest voices to weigh in comes from Mark Zandi, chief economist at Moody’s Analytics, who recently stated, "This is not a recession. It's not even in the same universe as a recession. It's just patently wrong to say it is." Ah, seems we’re back to that old debate again!

A Little More About Us

The Unleashed Brands platform includes Urban Air Adventure Park, Snapology, The Little Gym, XP League, Class 101, and Premier Martial Arts family entertainment franchises. As the parent company, Unleashed Brands was founded to curate and grow the most innovative and profitable business opportunities that help kids learn, play and grow. Over the last 10 years, the team at Unleashed Brands has built a proven platform and know-how for scaling businesses that focus on serving families. All have become first-in-category brands by providing fun, engaging, and inspiring experiences that help kids with their No. 1 development goal – to become who they were destined to be.

To speak with one of our franchise experts and learn more about our children’s business opportunities, simply fill out this form and an Unleashed Brands representative will be in touch shortly.