Recently I attended a franchise conference where one person proclaimed, “It’s amazing…every franchise company I met with today is recession proof.” He of course made the comment tongue in cheek, but I got a big kick out of it because most businesses that I know of are in some way affected by the economy.
The fact is, if you are out of work or have less money than you’re used to having, you will probably change your spending habits as a consumer, especially if you have a family that you have to provide for. You might go a little longer between haircuts and oil changes, give the dog a bath yourself instead of having him professionally groomed, or cut your own grass. And you’ll probably eat out less often. Businesses where the “bill” is paid by others are affected too. If you have a claim on your homeowner’s insurance, for example, chances are the insurance company (now more than ever) is going to want to pay less for that service than in the past.
Even the senior care industry is impacted. We aren’t really seeing a big loss of clients from the economy, but we have in some cases seen clients reduce the amount of hours that they hire us for. Still, in 2008 Right at Home posted our strongest year ever with over $100 million in system-wide revenue. Part of this growth is due to the increase in new franchisees, but a lot of it has to do with the sheer demographics – people are living longer, and they prefer to stay in their homes as long as possible to retain their independence.
What exactly is “recession proof?”
I’ve never been a big fan of the word “recession proof,” because it seems like most things we do are directly affected by how much money we have. Seeking businesses that are recession resistant would probably be a better phrase to use.
So, what businesses are recession resistant? A few years ago the answer was kids, pets, and senior care. Those were the “hot” industries because they were services that people were most willing to spend money on. Now, though, things have changed for some of those industries. As far as kids go, I think parents will always be willing to spend money on their kids – at least the ones that still have steady, disposable incomes. But, as a friend of mine noted in a conversation with me the other day, this recession will finally require parents to tell their kids “no” for some things. I agree, and I think we’ll see a bit of a pullback in the discretionary kids businesses.
As for pets, I think most pet owners that are in a financial bind will be just fine with letting Fido’s fur grow a little longer, or doing things themselves such as giving him a bath or scooping the backyard. For those of you that don’t know, yes, there are several franchises dedicated to this dirty job. Here’s one with a good sense of humor about their business.
Senior Care and the Recession
So, what’s happening with home care? This is, after all, in the subject for this blog. Senior care, or in-home care as some call it, is one of the few industries that can legitimately claim this recession resistant title, at least conceptually. We’ve all heard about the aging baby boomers, and the fact that people are living longer and longer. And we know that elderly people as a general rule do not like to move into nursing homes. The “adult children” who often make the decision to put them there wrestle with the decision as well. So, the obvious alternative is this service called in-home care. It allows people to maintain their independence and dignity by staying in their own home.
You may notice above that I used the word “conceptually” when discussing the recession resistance of the senior care industry. This is because I know of very few franchises in the industry that actually prove they are recession resistant. Some only publish data on a few offices, or they publish data pertaining to the original “company–owned” business. Usually, those franchises only have data for one year, with no mention of the previous year’s performance.
At Right at Home, we are proud of the performance of our franchisees, and the data in our official Franchise Disclosure Document (FDD) includes over 100 of our offices. It also includes the % of growth from 2007 to 2008 to allow prospective franchisees to see the trends from year to year. And, we break down the data by the number of years they have been in business, and by revenue category. I guess what I’m saying is that there is plenty of data in our FDD for prospective franchisees to review and consider. Our philosophy is this: if we can be transparent in communicating with prospective franchisees, they will be in a much better position to make a decision about the Right at Home franchise opportunity. Out of good information come good decisions.
The Bottom Line
If the franchise you are considering talks about being recession proof or recession resistant, ask them to prove it.