When is the Best Time During the Economic Cycle to Franchise and Why?

Franchising During A Recession. Really?

Franchising a business can be a lucrative venture, but choosing the right time to expand your franchise network can make all the difference. The decision to franchise isn’t just about having a great concept; it’s also about timing. The economic cycle plays a critical role in determining when to take the leap into franchising. Whether the economy is booming or in a downturn, each phase offers unique opportunities and challenges.

Let’s explore the different phases of the economic cycle and the best strategies for franchising at each stage:

1. Expansion During an Economic Upswing: The Prime Time for Growth

An economic upswing is often viewed as the best time to expand your franchise. During this phase, businesses tend to benefit from a strong demand for goods and services, increased consumer confidence, and greater access to capital. Franchisees are more likely to invest when they feel confident in the market’s growth, and customers are more willing to spend.

From a franchisor's perspective, an upswing allows for better negotiating power with landlords and suppliers, lowering the costs of starting new locations. With ample financing options available, potential franchisees can also access the capital needed to launch new outlets.

However, while this is an ideal time for growth, it’s important to remember that the market can become crowded. As consumer spending rises, competition increases, so franchisors should be prepared with a solid plan for differentiation and customer retention.

Key Considerations for Franchising During an Upswing:

• Strong consumer demand

• Easier access to financing for franchisees

• Greater negotiating leverage with suppliers and landlords

• Ability to scale quickly and expand market presence

2. Navigating an Economic Downturn: A Cautious but Strategic Approach

Franchising during an economic downturn may seem counterintuitive, but history shows that many of the world’s most successful franchises were founded or expanded during recessions. The key is to be strategic and adaptable.

In times of economic downturn, consumers tend to spend less, and financing options may be tighter. This means franchisors must be cautious about expansion and focus on cost management and efficiency. While some franchises may need to slow down, others might find opportunities to thrive by supporting franchisees through tough times.

During a downturn, a franchisor might be able to negotiate better lease terms, acquire distressed assets at a lower cost, or attract talented franchisees who are seeking more stability and a proven business model in an uncertain market.

Franchisors should also focus on creating support systems for franchisees, helping them navigate the challenges posed by reduced consumer spending and tighter credit.

Key Considerations for Franchising During a Downturn:

• Focus on cost-efficiency and operational streamlining

• Be prepared to support franchisees with additional resources

• Opportunity to acquire assets at a discount and negotiate favourable terms

• Attract franchisees who are looking for stability and a solid business model

3. Capitalising on an Economic Recovery: Rebuilding and Expanding with New Opportunities

As the economy begins to recover from a downturn, franchisors can capitalize on shifting market conditions and consumer behaviours. Recoveries often bring new consumer trends, changing demands, and fresh opportunities for expansion. Businesses that are agile and able to adapt to these changes will thrive.

For franchisors, an economic recovery represents a time to strategically expand into new markets or to diversify product offerings to meet emerging consumer preferences. As consumer confidence rises, franchisees are more likely to invest, and franchisors can tap into pent-up demand for services and products.

Franchisors must remain adaptable and prepared to adjust their business models to fit the evolving landscape. Whether it’s a shift towards online services or an increase in demand for local businesses, being proactive in identifying these trends will position the franchise network for long-term success.

Key Considerations for Franchising During a Recovery:

• Seize opportunities to expand into new markets

• Adapt to emerging consumer preferences and trends

• Leverage increasing consumer confidence and spending

• Take advantage of low-cost financing options that become available post-recession

My Conclusion: Are You Ready to Ride the Economic Wave?

Understanding the dynamics of the economic cycle and how it impacts franchising is critical to making an informed decision. While expansion during an upswing offers the benefits of strong demand and readily available capital, downturns can also provide unique opportunities for growth and acquisition.

Ultimately, the best time to franchise depends on your business’s readiness and ability to adapt to the economic conditions at hand. If you can identify when your business is in a position to thrive—whether during an upswing, downturn, or recovery—then you will be able to make strategic decisions that align with the market environment.

Are you ready to ride the crest of the economic wave? Make sure to assess the timing carefully, prepare your business for the challenges ahead, and position your franchise for long-term success.

If you’re interested in learning more or need guidance on the best time to franchise, feel free to reach out. We’re always happy to chat and provide expert advice to help you make the right move for your franchise journey.

Bio - Barry Money, Founder - Bane Enterprises

For the first ten years of Barry’s career, he consulted in global franchise standards and led significant transformation and innovation projects.

Barry has diverse corporate experience across multiple disciplines including sales, marketing, customer service, product management, export, quality assurance, engineering, IT and supply chain with full accountability for P&L.

At the end of Barry’s corporate career, where he earned the nickname “Goliath Slayer,” Barry transitioned to the C-Suite. Barry Money is a graduate of the Australian Institute of Company Directors and a C-Suite professional, with an MBA in entrepreneurship.

Barry has held director, board member, CEO and leadership positions in start-ups, NFPs, Founder-operated entities, industry peak bodies and commercial organisations. 

He held a leadership role at Australia’s largest franchise group, where he was instrumental in driving disruption and growth.

Barry has worked in franchised industries, franchise consulting companies and some of the largest franchised brands globally.

After many years living and working all around the world, he is fluent in Japanese, French, German and conversant with several other languages.

A dynamic, results-driven leader who prides himself on lateral, entrepreneurial thinking and creativity, Barry is renowned for developing and fostering strong teams and a collegiate spirit.

Barry Money now heads up Australia’s ethical, efficient, effective, end-to-end choice for franchising solutions, Bane Enterprises.

Contact details

E: online@baneenterprises.com