BY THE TIME DONI PITCHFORD TOLD anyone what she had done, it was too late. "The store was already built. There was no turning back," she says. Owner and operator of a Jamaica, New York-based Subway franchise, Pitchford took the leap into franchising back in June 2005. Of course, she had no idea she would soon land smack in the middle of one of most severe economic downturns since the Great Depression.
"Historically franchising has been the business model that has gone up during economic slowdowns," says Miriam Brewer, the International Franchise Association's director of education and diversity, who points to the franchising industry successfully going in and coming out of the technology recession of 2002. "But this particular economic downturn is very different from others that we have seen."
With outside factors such as the credit crunch and housing crisis, businesses of all sizes are struggling to keep their doors open. But it isn't all doom and gloom. In fact, certain industries are faring well in this climate--and in many cases, franchising is the best avenue for tapping into them. BLACK ENTERPRISE, working closely with the IFA (www.franchise.org) as well as the Arlington, Virginia-based franchise research firm FRANdata (www.frandata.com), looked into those industries to uncover 20 recession-resistant franchises that are not only outperforming now, but are poised to generate returns well after the long-awaited economic recovery arrives.
Experts will vouch that no franchise is recession-proof and outcomes aren't guaranteed. But with due diligence and strategic planning, you can embark on an entrepreneurial venture during these challenging times with confidence and be optimistic that when the economy turns, it will be in your favor.
An avid customer already, Pitchford saw the Subway sandwich chain as the perfect opportunity to be her own boss. "It allowed me an affordable entry point," says the 38-year old. "I didn't know how to build a store, but the system is already there for you and you're able to align yourself with a known brand."
Using $70,000 in savings from her full-time job as a physician assistant and $100,000 in a home equity line of credit) she purchased her franchise. Much of the startup costs went toward training at Subway University; purchasing ovens, chairs, freezers and other equipment; as well as a down payment for the rental and build out of her 1,300-square-foot space. Franchisees have to scout and secure their own store location; Pitchford chose the former location of a travel agency within a complex that includes retail shopping as well as resident apartments and co-ops. "The rent is reasonable and there's a built-in customer base," says Pitchford, whose franchise has four full-time and six part-time employees and 2008 revenues totaling almost $400,000.
"You can never go wrong picking the right food company," says Rieva Lesonsky, a small business and franchising consultant and author of Start Your Own Business (Entrepreneur Press; $24.95). She agrees that quick-service chains are standouts during this recessionary period. Quick-service is the only sector that forecasters at accounting and market research firm PricewaterhouseCoopers anticipate seeing growth in all three areas of establishments, economic output and increased jobs.
Franchisors such as Subway and McDonald's are able to provide franchisees with national marketing and advertising backing. For example, when Subway launched its $5 foot long promotion franchise-wide, owners such as Pitchford (who is required to allocate 4.5% of her sales to national marketing) saw immediate results--sales spiked 52% during the promotion compared with the prior year.
"Doni has done a good job of maintaining a high level of customer service and keeping her store well staffed and employees friendly; these are keys to success during hard economic times," says Mark Choi...