Franchising During a Recession: Resilience in Challenging Times
- Barry Money
- 3 days ago
- 3 min read
Recessions are often seen as tests of resilience and leadership acuity, and 2024 was a particularly challenging year for many Australian businesses. According to Creditor Watch, the business failure rate was expected to rise from 4.4% to nearly 6% at the end of 2024, while personal insolvencies reached nearly 12,000 a 17% increase over the previous year, as reported by the Australian Financial Security Authority (AFSA).
The past few years, especially following the tail end of COVID, have pushed businesses and individuals alike to the brink. The Australian Bureau of Statistics has noted a rise of 5.6% in hours worked, yet salaries remain stagnant, and the cost of living continues to rise with high inflation, rampant government spending and burdensome interest rates.
However, despite these challenges, the Australian franchising industry continues to grow. In 2024, the industry was forecasted to generate $185.1 billion in revenue, with an annual increase in the number of franchising businesses and individual units across the country. This shows that, even in difficult economic conditions, franchising remains a strong and attractive model for business growth.
The increase in franchising can be attributed to various factors. Many professionals, particularly those who have experienced corporate redundancy, are now looking to invest their capital and skills into franchise systems. These individuals, often with substantial redundancy payouts, bring both expertise and financial backing, making them ideal candidates for franchise opportunities. They no longer want to rely on big corporates, who have proven themselves unworthy, shedding tonnes of jobs during the downturn.
Moreover, the very nature of franchising—offering a proven system, a strong brand, and ongoing support—has proven resilient. While startup businesses face a high failure rate, estimated at 90%, franchising offers a safer route, with systems that are already operational and successful. Franchisors provide franchisees with proven operational models, support infrastructure, and established brands, which significantly reduce the risks involved.
Additionally, franchisors are well-positioned to take advantage of the opportunities that arise during a recession. This includes negotiating better terms for leases, securing favourable deals on technology and supplies, and benefiting from a reduced competitive landscape, as many businesses scale back during tough times. These advantages allow franchisors to expand their networks, grow their brands, and capture market share, all while building a solid foundation for the future.
For entrepreneurs or business owners who have not yet franchised, a downturn may be the perfect time to start planning for expansion. A depressed economic climate provides a unique opportunity to create a resilient franchise system that can take advantage of the inevitable upswing once the economy recovers. Investing in the development of a comprehensive franchise model—including financial planning, legal agreements, marketing strategies, and franchisee recruitment—can position a brand for long-term success.
My final summation is this: While recessions undoubtedly present challenges, the resilience and adaptability of the franchising model make it an attractive option for both business owners and aspiring franchisees. With the right strategies in place, franchisors can thrive even in tough times, positioning themselves for success as the economy rebounds.
Bio - Barry Money, Founder - Bane Enterprises
For the first ten years of Barry’s career, he consulted in global franchise standards and led significant transformation and innovation projects.
Barry has diverse corporate experience across multiple disciplines including sales, marketing, customer service, product management, export, quality assurance, engineering, IT and supply chain with full accountability for P&L
At the end of Barry’s corporate career, where he earned the nickname “Goliath Slayer,” Barry transitioned to the C-Suite. Barry Money is a graduate of the Australian Institute of Company Directors and a C-Suite professional, with an MBA in entrepreneurship.
Barry has held director, board member, CEO and and leadership positions in start-ups, NFPs, Founder-operated entities, industry peak bodies and commercial organisations.
He held a leadership role at Australia’s largest franchise group, where he was instrumental in driving disruption and growth.
Barry has worked in franchised industries, franchise consulting companies and some of the largest franchised brands globally.
After many years living and working all around the world, he is fluent in Japanese, French, German and conversant with several other languages.
A dynamic, results-driven leader who prides himself on lateral, entrepreneurial thinking and creativity, Barry is renowned for developing and fostering strong teams and a collegiate spirit.
Barry Money now heads up Australia’s ethical, efficient, effective, end-to-end choice for franchising solutions,
Bane Enterprises.
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