The 50 Best Recession-Proof Businesses to Start in 2020

The New Normal

At the beginning of 2020, the United States enjoyed a low 3.5% unemployment rate and one of the strongest economies in history. Then the coronavirus hit, forcing Americans to stay home and stop working, as they watched the stock market crash and unemployment soar. Within a few short weeks, the country slumped into a recession. 

Today, more than 36 million Americans have lost their jobs, and economists predict an unemployment rate that may soar over 20% in the coming months. As a result, many small businesses previously thought to be recession-proof are now struggling to survive.

See who made the list! Click here for the list of the 50 best recession-proof franchises to start in 2020. You can also download the full report here

Business will come back, but how will workers adjust to their new normal? 

It’s important to remember that in 2009, the U.S. Bureau of Labor Statistics reported unemployment rate had climbed to 10%. Workers in this period experienced the worst business conditions since the Great Depression and the longest recession since WWII. In fact, more than 170,000 small businesses closed between 2008 and 2009 based on a report by The Business Journals. And yet, the decade that followed brought historic growth for business owners.

While most experts agree that we will experience a fairly swift economic recovery beginning this summer, many senior and mid-level executives furloughed during the pandemic may experience difficulties finding comparable career options. Companies will want to run “lean and mean” over the next few years and will use this time to replace many corporate roles with younger, cheaper talent. For mid-career professionals looking to leverage their skills and find meaningful work, franchising may hold the key to their financial recovery. 

“Franchising has historically done very well under most economic conditions,” said Eric Stites, CEO and managing director of Franchise Business Review. “During boom periods, the fear of missing out on a great opportunity fuels strong franchise growth. During a downturn on the other hand, lack of employment opportunities or fear of job loss drives many people to explore franchise ownership.”

While some franchises had to pause business during the pandemic and may need time to recover, those sectors that provide goods or services that fulfill basic needs are likely to perform well and even grow during an economic downturn.

“Understanding how a business will likely perform during a recession is an important consideration before anyone invests in a franchise,” said Stites. He urges potential business owners to ask themselves, “Are the business’s products or services more luxury items or everyday necessities? Who are your typical customers and how may their purchasing decisions change?”

While no business is completely recession-proof, Franchise Business Review has identified 50 franchise opportunities that we feel have the greatest chance of performing well over the next few years.

50 Best Recession-Proof Franchises Webinar

Opportunity Ahead: A Look at Recession-Resistant Sectors

In these uncertain times, history is our best guide. Even during the worst economic times of the past, some businesses thrived. The same will hold true now. As franchise companies adjust their business models or pivot completely, we expect a number of business sectors to outperform others. Here’s a glimpse of what we see coming over the next few years:

Automotive Repair Franchises

During a recession, new car sales typically dip dramatically, while the demand for car repairs goes up. People tend to hang onto their current cars longer, and businesses specializing in used car sales and automotive repair benefit. The Los Angeles Times reported a $36 billion increase in sales at auto repair businesses between 2010 and 2011. Additionally, an article in the Journal of Marketing Channels found that auto repair franchises that offer a wide range of services tend to be more successful during recessions than companies that specialize in one area.

Business Services & Staffing Franchises

For companies looking to slowly gear up again, it makes more sense for them to outsource certain business services like payroll, recruiting, and benefits management to franchises that can help them bridge those gaps cost-effectively. And, those companies looking to bring on more contract workers as they scale up will look to temporary agencies or staffing firms that can help them find the right labor in lieu of hiring in-house, full-time staff.

“The original Payroll Vault home office location was founded in 2008. Starting a new business during a recession proves its resiliency and subsequent opportunity. Each year that goes by, we focus on building a stronger foundation for the brand with proven systems that provide the best opportunity for Payroll Vault franchise owner success.”

Sean Manning, CEO and founder
Payroll Vault

Child Services & Education Franchises

As parents re-enter the workforce in the coming months, there will be a need for all types of child services. Whether moms and dads are looking for activity programs, summer camps, after-school programs, or tutoring services to bridge the distance learning gap, they’ll rely on trusted brands that have a good reputation in this sector.

Cleaning Franchises

Whether offices or homes need freshening, people are depending on sanitation experts to bleach and clean every last corner. The coronavirus amplified the importance of thorough cleaning, and brands that offer these services for commercial and residential customers will likely clean up in the franchise world. 

“As states open back up, we expect huge growth. Our franchisees have, for the most part, held their own by providing upgraded cleaning and disinfecting services to essential customers. Once non-essential customers return, at minimum, they should return to the previous levels of cleaning, but we actually expect most to increase the frequency of cleaning services and special disinfecting services.”

Todd Hopkins, CEO
Office Pride

Financial Services Franchises

The coronavirus caused many families to relook at their portfolios. Whether they experienced tumbling stock returns, gaps in their insurance, or need to make adjustments to their financial plans to fit their current scenarios, they’ll need trusted advice to help rebuild their wealth. At the same time, current favorable interest rates have prompted many families to refinance their mortgages–opening up opportunity in this market. 

“Over the past few months, we took the opportunity to look closely at what we were offering and considered how we could make it easier for people to reach their dreams through owning a Brightway franchise,” said Brightway President and CEO, Michael Miller. “We believe the new option with a $5,000 franchise fee will open the door for many more people who wish to open a recession-proof business that pays residual income year-over-year as policies renew.”

Fitness Franchises

Even if they haven’t gained “The Quarantine 15,” fitness-starved men and women will be ready to rejoin newly reopened gyms. To save money, many may be ready to leave full-service fitness centers and be shopping around for niche or lower-cost fitness concepts.

Food Franchises

People eat out even in a down economy. While some diners will tighten their entertainment budgets, post-quarantine trends will most likely see Americans dining or ordering out just as much or more than before COVID-19. Trends show that food franchises that offer lower-priced, value options and curbside pickup and delivery services will tend to recover more quickly.

Home Repair & Maintenance Franchises

Because people will be spending more time at home, the demand for home repair and maintenance services is expected to grow. In a recession, investments in kitchens, flooring, bathrooms, and exterior improvements tend to not only cost less than other major renovations, but also add resale value. 

Personal Services Franchises

Hair salons, barber shops, and spa services were all forced to cease operation during the initial outbreak of the coronavirus. But, the demand for these services never cooled. As stylists and therapists get back to work and restrictions ease on other personal care services, customer will return to their regular spending patterns.  

Real Estate Franchises

When the economy takes a turn for the worse, real estate sales typically slow – especially high-end real estate sales. That said, real estate companies that focus on the lower and middle-tier markets have traditionally fared well during a recession, as many people end up relocating in order to find new employment opportunities. 

Senior Services & Home Care Franchises

Nursing homes and long-term care facilities have been particularly hard-hit by the coronavirus. For example, in New York state alone, more than 4,800 people nursing home residents have died from COVID-19, according to a May article published in The New York Times. 

Families will continue to look at in-home care service providers to support their elderly parents, as more than 58 million Baby Boomers will be between the ages of 66 and 84 by 2030. This industry is experiencing enormous growth and promises job-security, a very tempting offer for those striving to open their own businesses.

“These staggering numbers have prompted families to begin honest conversations about how they want to care for aging loved ones, prompting many to look at in-home care as an option. This has made us look at our health care system in a different way. Actively planning and proactively discussing care options is a really good thing and most people don’t do it.”

Brian Petranick, CEO
Right at Home

Specialty Retail & Resale Franchises

If your franchise fills a unique niche, it’s likely your customers will stay loyal. While people were sheltered at home this spring, many found solace in hobbies and home-based activities. Activities like bird feeding and backyard fun cost a lot less than heading to a vacation destination. With less discretionary income, Americans also become more thrifty. The resale craze first hit shoppers during the 2008-2009 recession. Although clothing stores’ sales were down by 10% in 2009, the average sales at thrift stores had increased by an average of 35%, according to CNN Money.

Specialty Services Franchises

Any franchise that offers specialty services that consumers can’t find anywhere else are bound to enjoy healthy returns. As Americans get back to work, they’ll continue to spend money on home and office services, moving assistance, repairs, and other niche service offerings. 

“As a company founded 45 years ago, Pinch A Penny has seen a fair share of economic ups and downs. Despite all of these, Pinch A Penny has recorded more than 40 years of positive growth and remains the leading swimming pool franchise. Our business model provides essential services through multiple revenue streams that combine retail, pool cleaning, and several backyard services including pool renovations, leak detection and power washing. 

With families having to be hunkered down at home for the past couple of months and summer quickly approaching, our franchisees have been busily dedicated to keeping pools fully operational and maintained with the right balance of chemicals in order to create the safest, most sanitary water environment for family fun.”

Michael Arrowsmith, Chief Development Officer
Pinch A Penny Pool Patio Spa

Methodology for Selecting the Top 50 Recession-Proof Franchises of 2020

Our first steps in compiling our Top 50 Recession-Proof Franchises list included identifying and agreeing upon the criteria we would use – no easy task with thousands of franchise opportunities across the United States from which to choose from. 

Our first criterion for inclusion on this list was high franchisee satisfaction scores. Franchise Business Review surveys tens of thousands of franchise owners every year, and owner satisfaction is always the first benchmark we begin with. We quickly narrowed our list down from more than 3,000 franchise companies to just the Top 200 franchise opportunities based on satisfaction alone. We recently published our Top 200 Franchises for 2020 in January, so we felt this was a good starting point.

Once we put these minimum standards in place, we started to identify the specific criteria that would be used to measure franchise companies and franchisees against those standards.

See who made the list! Click here for the list of the 50 best recession-proof franchises to start in 2020. You can also download the full report here

Selecting the Very Best Recession-Proof Businesses

Narrowing our Top 50 Recession-Proof Franchises list from 200 potential opportunities down to the 50 top franchises proved to be even more challenging. After all, we’re currently living in historic times. As we stated earlier, no business is completely recession-proof, especially right now. But we can look back to see how these franchises performed during the Great Recession of 2008 – 2010, and also look at more recent industry and consumer trends to help us predict how many of these businesses will perform over the months and years to come to determine which franchises are likely to be more recession-proof than others.

In addition to franchisee satisfaction, we looked at a number of key factors that would help us gauge how recession-resistant a business is likely to be, including:

  1. A strong proof of concept in multiple markets
  2. A product or service that is a “need to have” vs a “nice to have”
  3. A steady and/or growing market sector
  4. Value-pricing for target consumers
  5. The required franchise investment and development timeframe
  6. Evidence of past performance during a recession (2008-2010) 
  7. Strong historical unit-level economics
  8. Solid financial strength of the parent company
  9. A highly regarded management team, as rated by the franchisee community
  10. Clean review of the franchise disclosure document (FDD)

Proof of Concept

There are many innovative and creative new business concepts demonstrated in franchising today, yet the primary benefit of investing in a franchise is having access to the franchisor’s proven track record of success–which has already been tested in various markets. This key benefit can only be realized by investing in more established brands of a certain size that have stood the test of time.

To satisfy this criterion, we only considered top-tier franchise brands with well-established business models and strong networks of franchisees. With only a few exceptions, the vast majority of the franchise companies that made our recession-proof list have been operating for a decade or more, and most have more than 100 locations nationally. Certainly, there are some interesting, smaller franchise opportunities out there that show strong signs of being recession-proof, but we strongly favored those businesses with longer, more successful track records.

“Need to Have” vs “Nice to Have”

When consumer budgets tighten during a poor economy, spending often shifts toward products and services deemed necessary and vital, and away from products or services deemed unessential. This can obviously be subjective and varies from market to market based on financial demographics. For example, while homeowners over the past few weeks may have put off big-ticket items like new additions or fancy kitchen renovations, basic handyman services, plumbing, and appliance repair services often grow in demand as people understand the importance of maintaining their home values. Child services, education, pet products, and lower-cost fitness business concepts are all sectors that are typically recession-proof. 

Value-pricing Options

During a recession, consumer spending slows–but it doesn’t stop. Businesses that are perceived as offering value-priced products or services have been historically recession-proof. Another example: while consumers may cut back or even eliminate visits to high-end restaurants, pizza parlors and other value-focused, quick service restaurant (QSR) franchises can thrive – especially businesses that are viewed as both values-focused and family-friendly.

Investment and Development Timeframe

There were a number of strong franchise opportunities that we removed from our recession-proof list simply because of their high investment requirements and longer development cycles. For example, Planet Fitness, The Goddard School, and Wendy’s were a few brands that we removed. While these brands have outstanding franchisee satisfaction scores, and we predict they will perform very well during the economic downturn, their higher investment costs and longer development time frames require a business investor with more capital and a longer-term investment horizon. 

Unit-Level Economics

While top-line sales (gross sales or revenue) of a business are important performance metrics, the bottom line (net operating income) is where the rubber meets the road for franchise owners. Believe it or not, there are many small businesses that generate hundreds of thousands of dollars in revenue each year, but they don’t turn a profit – or worse, they lose money. Obviously, profit margins are critical, especially in a down economy. Understanding the economic potential of a particular unit (business outlet or location) is a must before investing in any business. 

At a high level, we know the businesses on our Top 50 Recession-Proof Franchises list have historically performed well for franchisees. In the current economic climate, it’s important for prospective franchisees to talk with many different franchise owners and learn first-hand how their business is performing for those business owners.

Franchisees Know Best

Nobody knows whether or not a franchise business is a great investment better than the franchisees who’ve bought into those brands. The questions we asked them were pretty straightforward: 

  • Are you receiving good support? 
  • Are the business systems and processes solid? 
  • Do the marketing and promotional programs actually drive business? 
  • Is the business performing well financially? 
  • And most importantly, would you recommend your franchise to others?

Having surveyed franchisees from more than 1,200 franchise companies over the last 15 years, Franchise Business Review understands how closely high franchisee satisfaction scores are tied to franchise performance. Low franchisee satisfaction scores immediately disqualified a company from our list, no matter how recession-proof we thought their business might be.

It’s important to note that some franchise companies don’t allow third-party research firms like Franchise Business Review to survey their franchise owners, or if they do, they don’t share this information publicly. In these cases, these brands were disqualified for their lack of available data. 

See who made the list! Click here for the list of the 50 best recession-proof franchises to start in 2020. You can also download the full report here

The Highest of Standards

In the final phase of identifying top-tier franchise brands, we conducted a Franchise Disclosure Documents (FDD) review of each franchise company. We reviewed the FDDs for items such as:

  • Management experience
  • Previous bankruptcies
  • Litigation against and/or filed by franchisees 
  • High unit turnover (in excess of 15% annually averaged over the past 3 years)
  • Healthy corporate financial statements. 

Identifying the Best Recession-Proof Franchise Businesses of 2020

We’ve said multiple times already, but it’s worth repeating here – no business is completely recession-proof. That said, given all of our research and experience observing the franchise economy for the past 15 years, we feel strongly that our list of the Top 50 Recession-Proof Franchises for 2020 represents some of the best potential business investments for investors over the next few years.

Note: Franchise Business Review always recommends that before anyone invests in a franchise business, they should hire a franchise attorney to help them review both the Franchise Disclosure Document (FDD) and the franchise agreement. A qualified franchise attorney can help educate you about the detailed contents in the franchise agreement and FDD so that you can make a well-informed decision.

Includes owner satisfaction report
out of 100

Kona Ice

Industry: Food & Beverage
Investment: $149,995 - $189,300 Cash Required: $20,000
Includes owner satisfaction report
out of 100

Snap-on Tools

Industry: Automotive, Services
Investment: $217,505 - $481,554 Cash Required: $45,088
Cruise ship on water city lights
Includes owner satisfaction report
out of 100

Cruise Planners

Investment: $2,295 - $23,465 Cash Required: $10,995