What are some tips for choosing a franchise in a recession?
This is a great question because it spotlights a prime consideration in ‘franchise selection’ that is necessary outside of recessionary periods, but critical when experiencing one.
When performing ‘franchise due diligence‘ one of the most crucial elements is whether or not an opportunity can actually be ‘profitable’. Now, in case you are scoffing at that remark, rest assured that most franchise buyers ‘never’ fully understand the nature of the investment, indeed, very few understand the documents that they are signing. This may be surprising, but it’s true.
In times of recession, quality due diligence moves from a necessary step to a ‘must’ do step. Why? Because there is simply less margin for error if one cares to succeed.
Of course, another consideration for purchases in times of economic downturn is that of product/service pricing. Why is the ‘dollar menu’ at fast food chains seeing such demand? Well, there you go, you just answered the question yourself.
I remember years ago my father told me that during the ‘big depression’ the chewing gum people never really suffered. I guess that you always had a penny for gum, or today, a dollar for a burger.