The year 2020 is fast approaching and the threat of a global economic recession seems to be more perceived than before.
If you’re planning to start a new business or buy a franchise anytime soon, you should consider industries that are more resistant to economic downturns.
In this article, we’re going to look at some of the recession-proof franchises that can easily weather the storm of a potential economic crisis in 2020 and even offer a high ROI during the recession.
But before that, let’s see where the economy is going next year.
Is a new recession likely to happen and when?
While the beginning of a new economic depression is not anticipated to be in the first half of 2020, more and more analysts share the opinion that it will happen in late 2020 or early 2021.
A recent Duke University/CFO Global Business Outlook survey has shown that optimism about the US economy is at the lowest level among American Chief Financial Officers (CFOs) and the majority of them believe that a recession will hit the US by Q3 2020.
The US trade policies under Trump administration — including the Sino-American trade war — the possibility of a no-deal Brexit, and a geopolitical crisis are said to be the main factors that could trigger a new global economic slump.
And now, at the time of this writing, a proposed plan by Donald Trump to impose tariffs on some European products is fueling an already heightened fear of a global recession in 2020.
Economic uncertainty will most likely lead to reduced investment spending by businesses and more layoffs, which in turn can affect consumer confidence and lead to decreased consumer spending.
Add to this the corporate debt buildup during the low-interest era that will cause widespread bankruptcies in case of economic weakness or rising interest rates.
Furthermore, the UN’s trade and development body said in its annual report that while weak economic growth of 2019 was likely to turn into an outright contraction in the coming year, policymakers didn’t seem to be prepared for the impending storm.
Anyhow, there are still businesses that can remain profitable in times of economic woes.
Here are the best recession-resistant franchises to start in 2020.
10 recession-proofs franchises for 2020
1. Food and beverages
Food is the most basic need of man, no matter how the economic condition is.
People need to eat at any time and have to spend money on food even during the worst recessions.
By investing in food-related businesses, you can make sure that you can still make a healthy profit.
Of course, the food industry is very diverse.
It might not be a good idea to open a luxury restaurant that is beyond the means of most people.
Instead, starting a cheap restaurant, a small fast-food joint, or a grocery store affiliated with a big name in the food sector can be a wise decision.
Fast food is currently the top franchise industry.
History shows that fast food franchises not only can escape the pinch of a recession, but they can also grow.
For instance, while the great recession of 2008 dealt a crushing blow to many business, Subway added 6000 restaurants between 2008 and 2010, the biggest expansion of any chain.
2. Repair and maintenance services
In times of economic hardships, it is normal for people to become thriftier and more cautious about spending their hard-earned money.
Therefore, buying new household appliances such as a new refrigerator, a brand new car, or the latest iPhone model will be considered wasteful spending and will likely be put off until a better time.
But old machines break down all the time and electronic devices may suddenly stop working. In these cases, people need repair services to get their devices back on their feet. If you think that you can bring together a team of skillful auto mechanics, an auto repair and maintenance franchise is one of the best recession-proof businesses you can count on for 2020. It goes without saying that demand for other repair services such as mobile and electronic gadget repair rises in the same way as incomes drop and people get a sense of financial insecurity.
3. Health care
Nothing is more important than one’s health and wellbeing.
However, illnesses and accidents occur all the time, affecting people’s health and lives.
So when it comes to spending money on personal health care, being economical doesn’t much sense.
The health care industry has been an ever-growing lucrative industry so far and that’s because of the need to make it accessible to more people as well as the aging population in many countries.
In case you have the necessary manpower, resources, and capital, investing in the health sector can guarantee a decent profit.
Starting a business in the health care industry is not just opening multi-million-dollar hospitals and clinics.
Go for a business that is focused on providing affordable preventive solutions, home care services, rehabilitation services, and alternative medicine to people.
Healthcare in general and home care in particular showed strength during the past recession.
An analysis conducted by the US Bureau of Labor Statistics indicated that employment in the health care sector not only did not declined, but it also continued to grow during the Great Recession.
Employment un the home care sector increased by 18.3 percent between 2007 and 2010, which accounted for 20 percent of the total employment in healthcare.
During the same period, wages also increased by 7.9 percent in healthcare industry.
4. Restoration services
The earth’s fault lines and volcanos don’t become inactive during economic inactivity.
Natural disasters are a part of life everywhere and when they strike somewhere they may cause serious damage to people’s properties.
When hurricanes, earthquakes, wildfires, or floods hit the town, they inflict damage to houses and infrastructures, which creates a need for certain restoration services afterwards.
Such services are exclusively in demand at the time of natural disasters, of course.
There will always be occasional flooding toilets, bursting pipes, house fires, peeling paints, and ceiling leaks.
Therefore, with home and business owners seeking to get their property restored to useable status, franchises offering restoration services never run out of customers, even in an ailing economy.
Given that most buildings are protected by property insurance, why not people rush to get everything fixed?
If you are looking for a recession-proof franchise that offer a high ROI, restoration services should be in your list.
According to franchisedirect.com, home services is the third most profitable franchise categories. According to Delta Restoration Services, each franchisee affiliated with this company earns 2,467,366 in gross revenue on average.
By completing certain certificate programs and getting some training and specialty equipment, you can buy a franchise in this sector at a reasonable price.
5. Veterinary services
Just like humans, animals sometimes get sick.
Whether it’s a little pet cat in a house or a big cow on a dairy farm, people can’t watch their animals suffer from pain.
In the former case, the pet owner has a strong emotional bond with his/her fluffy family member and don’t care about spending money to see it up to snuff again, and in the latter case, the farmer will incur a considerable economic loss in case his/her cow dies, so spending some money to save the animal would be the right decision even if the economy remains sick.
Opening a vet clinic in a rural or urban area to offer services to farm animals and pets is a good business idea that can offer good ROI during a recession.
However, whether you’re a vet yourself or your hiring someone, you need to carefully assess the potential of the market and understand that it might take some time for people to get to know you and trust your expertise.
6. Education
Learning is an essential component of modern life.
People start learning when they are only a few years old and many of them continue to obtain some kind of education even until middle age.
From learning a foreign language to how to play a musical instrument, there is a wide variety of skills that people would spend money to acquire.
If you have considerable knowledge of a particular area and like teaching, starting a tutoring business will be a great idea for the coming year.
With people looking to enhance their skills to keep alive their chances of getting a job in a potential period of unemployment during the next economic recession, demand for academic or vocational courses will rise, creating an opportunity for businesses and franchises that offer educational and tutoring services.
7. Funeral services
We wish that with a slowdown in the economy, the death rates could also slow down, but the fact of the matter is that people lose their lives every day.
No matter when the death of a loved one happens, during an economic boom or a recession, their family want to give him/her a decent burial.
Businesses that offer funeral services have the opportunity to strive all the time because there are always clients.
Although such a business might sound too eerie at first glance for some risk-averse people looking for a recession-resistant franchise in 2020, the steady profitability it offers to the investors is a good reason one should give it a more serious consideration.
It is estimated that in the US alone, the 2.4 million funerals held annually generate some 20.7 billion dollars in revenue.
Last Word
We’ve gone over 7 best businesses or franchises that have proven to be able to survive during a possible global recession in 2020.
If you are considering buying a franchise or starting your own business, one of them might be the right choice for you.
That said, there is no 100 percent guarantee that all these business ideas will be successful.
You should give careful consideration to your decisions and seek professional advice before you begin.
