15 Examples of Franchises to Minimize Risk and Maximize Profit
Uncovering the best franchises to own may sound like a daunting prospect. After all, 2020 and the COVID pandemic played havoc with the U.S. economy. We’ve lost jobs. Businesses have closed. People have been 'locked in' their homes. All this has highlighted just how tough it can be to own a business. It’s also demonstrated that some businesses are way more resilient than others.
You want to own a business, but you want to do it right. Are there any low-risk franchise opportunities available to buy? Businesses that will ride out recessions and pandemics? How do you choose which franchise to buy in a recession?
Two Golden Rules for Finding Low-Risk Franchise Opportunities
If you are considering becoming a franchisee, it is crucial that you evaluate franchise opportunities before deciding to buy. There are some great businesses to buy in a recession, but how do you find those that carry the lowest risk? We have two rules of thumb here at New Ground Consulting:
Rule 1: Invest in businesses that have ideally been in business for 50+ years
Businesses with a long history have experienced pretty much all that can be thrown at them. They have the knowledge and experience to understand what strategies work in different market environments. They have adapted to changing consumer needs and desires. They have weathered recessions and emerged stronger.
There are a couple of notable exceptions (as we will see later in this article), but, generally, you should invest in franchises where the business has existed for 50 or more years.
Rule 2: Invest in a sector that is resilient
What do we mean by a resilient sector? One where demand for its services is likely to remain reasonably resistant to recession – or even grow. Consider, for example, our need for food – we all must eat, right?
When the economy is growing and earnings growth is high, people are more likely to treat themselves and visit higher-priced restaurants. When finances become strained, consumerism shifts. Take-outs become the treat. Grocery stores may see their sales rise.
Summing up, invest in resilient businesses that have a long history of success – as close to 50+ years as you can get.
15 Low-Risk Franchises to Own
We’ve selected 15 franchises, across five resilient business sectors, that fit our profile.
This isn’t to say these are the only franchises you should invest in. There are many, many more low-risk franchises available, and the best franchise for you will depend on many factors that are unique to you. However, this list should help you understand which types of franchises are the best low-risk franchise opportunities.
(We have included approximate investment amounts on some examples as guidance for you.)
Hair and beauty
The hair and beauty sector is highly resilient. Spending money on hair and beauty is not considered a luxury by many. Here are three great franchises in the sector.
This chain of salons offers an extremely broad range of services, from basic haircuts to hair treatments and hot towel refreshers. The company takes direct bookings online.
Developing, manufacturing, and selling their own skincare and cosmetics products, Merle Norman Cosmetics has stood the test of time. They were able to operate as an online store during the pandemic.
This salon chain is the most affordable and effective salon experience available to the average American consumer.
Automotive maintenance franchises are worth an estimated $8.9 billion in the U.S. Cars and trucks need services and repairs. During recessions, people are less likely to buy new vehicles and more likely to have their autos repaired.
Founded in the early 70s, Meineke Car Care Centers expanded into a full range of auto maintenance and repair services in 2003. Its parent company ‘Driven Brands’ owns a variety of auto companies.
AAMCO Transmission and Total Care provides a good range of services, including auto repair and corporate fleet services. Established as a transmission specialist in 1957, this company has navigated its own transmissions successfully since.
Milex Complete Auto Care belongs to the Moran Family of Brands. It offers a full range of auto repair and maintenance services, as well as fleet management services to its corporate clients.
Insurance franchises are ideal for many with experience in the sales or finance sector. Once more, highly resilient to recession.
Allstate Insurance provides franchisees the freedom to operate their own insurance agencies. With an initial cash investment of $100,000 and $50,000 liquid capital, the nature of this business enables owners to move to positive cash flow quickly.
Farmers Insurance offers owner-operator programs that guarantee exclusive access to the company’s benefits. A minimum initial investment of $50,000 is required.
Estrella Insurance is a company that specializes in vehicles, business, and home insurance. It requires a franchisee to make an initial investment of anything between $50,000 and $85,000.
A food franchise is one of the most resilient of businesses, standing the test of time through economic, social, cultural, and technological upheaval. Like air and water, we all need food.
Giant Tiger Stores Ltd. is a major discount retailer in the U.S. and Canada. Founded by Gordon Reid in 1961 in Canada, it started franchising in 1964. This business requires an initial investment of $100,000.
Founded in 1975 by Frank Borer, Express Mart grew quickly into a franchise with locations in prominent strip malls and gas stations across the U.S. The company co-brands with both local and major fast-food outlets for an initial investment of around $90,000 to $400,000.
Who doesn’t shop at a 7-Eleven? Founded in 1927, the investment required ranges from around $50,000 to over $1 million.
Energy is the one sector where the 50-year golden rule is broken. A greater social conscience in terms of green energy and renewable sources, the energy market being prone to constant change made this industry an anomaly to the rule.
Founded in 2007, REPOWER America is a national organization and the largest network of local solar providers in the U.S. They have been instrumental in helping local partners gain access to the solar market with the best equipment and financing options.
SuperGreen Solutions has been in the business of specialization in the selection and distribution of energy-efficient products since 2011. With its flagship store located in North Palm Beach Florida, it developed into a fully franchised operation in 2012.
A business that has helped homeowners save thousands of dollars with its high-quality home insulation systems, USA Insulation offers the best solutions to all your home improvement problems. It was established in 1977.
Home construction franchises present a variety of business opportunities to entrepreneurs and have always been very lucrative, usually for those with specific experience. In good times and bad, people want to maintain their homes in good condition and improve them – shelter is a basic need.
Founded in 1970, Mr. Rooter’s is a full-service plumbing and drain cleaning franchise that assists with both residential and commercial needs. With financing assistance available, the service requires an initial capital investment of around $80,000 to $200,000.
Weed Man has been providing lawn care services for over 50 years. Its core values are amazing service, integrity, passion, and innovation. You’ll need to invest around $100,000 or more to buy a franchise.
Backed by over 60 years of success, Buddy’s Home Furnishings has proven to be recession-resistant. You’ll need to invest upwards of $400,000 to run a Buddy’s Home Furnishings store when premises are included in your calculations.
Which is the best franchise for you to own today?
To find the best low-risk opportunities in franchising, you should consider your own goals and match them with the two golden rules I have explained above. We’ve included a few examples of businesses that have stood the test of time and economic volatility, but there are many more franchise opportunities that offer equally exciting prospects with low risk.
Your starting point should be to take the Franchise Aptitude Test and then book a free consultation with New Ground Consulting.