20 Recession Resistant Franchises

Promising picks to choose from—even in this economy

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There’s no question that the automotive industry has seen better days. But despite the woes of automakers and their dealerships, general auto repair services have been faring well. “Automotive from a demand standpoint has to do with lifestyle,” says Darryl Johnson, president of FRANdata, who points out that big ticket items often aren’t updated during recessionary times. “[Consumers] are not willing to make those major investments, and being [un]willing to make major investments leads to a greater frequency of maintenance.”

One standout is the automotive transmission repair and car care service company AAMCO which has shown consecutive franchise unit growth over the last three years. Another is the $1.1 billion auto maintenance and repair chain Midas International Corp. which is currently targeting displaced service customers, dealers, and employees of those automotive dealerships that have closed or are in the process of closing, to consider franchising or service employment with Midas as an alternative.  “People who would normally go to their local dealer to get their car serviced may not have that option anymore. So some local franchises are stepping up on all fronts,” says Lesonsky.

The aging U.S. population has turned the healthcare industry into one of the fastest growing parts of the economy, according to the U.S. Department of Labor. Although there are several variations, the category showing the most growth is home healthcare and services. FRANdata reports an average three-year franchise unit growth of 42%– the largest increase of all categories. Coincidentally, the franchises that made the list require a total investment of less than $75,000. Also, the majority of them are active participants in MinorityFran, an extension of the IFA dedicated to increasing the number of minority franchises.  One way to lure minorities is through signing incentives. For example, Always Best Care Senior Services offers prospective minority franchisees at least 5% off the franchising fee; 39% of their franchises are minority-owned.

Lesonsky says this is an industry that’s only going to increase in customers for the next few years, referring to U.S. Census Bureau data that the first swell of baby boomers turns 65 in 2011. But Johnson points to yet another factor that makes this industry so attractive right now. It’s one that you’re not willing to compromise on. “The quality triumphs the cost [for consumers],” he says. “They’re not going to go to a lower cost for a less supportive health service for an aging parent.”

In certain areas, consumers are likely to make compromises and opt for fewer frills to avoid a big hit to their budget. However, childcare is not one of those areas–and that makes for a recession-resistant franchise. “What you are seeing because of that [reality] is a continued expansion. There are indications in this recession of strength in this sector,” says Johnson.

(View the 20 Recession Resistant Franchises list here.)

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