Why Franchise Demand Has Boomed Over the Last Five Years

In an unpredictable economy, more investors are turning to businesses built on customer habits, brand power and consistent footfall

Over the last five years, investors have experienced one of the most turbulent periods in recent financial history. Markets have climbed to record highs, suffered sharp corrections and recovered again, often within the space of months. From the Covid-19 pandemic to soaring inflation, geopolitical instability and rising interest rates, uncertainty has become the new normal.

For many investors, the experience has been frustrating. Portfolios that looked strong one quarter suddenly weakened the next, not necessarily because the underlying companies had deteriorated, but because sentiment shifted. A change in inflation expectations, a central bank decision or disappointing quarterly guidance could wipe billions off valuations almost overnight.

Yet while financial markets were moving violently, something far more predictable was quietly happening in the real economy. Consumers were still buying coffee on their way to work. Families were still choosing convenient meals after long days. Commuters still wanted familiarity, speed and trusted brands.

This is one of the reasons franchise demand has increased significantly over the past five years.

Increasingly, investors are beginning to ask themselves an important question: is it better to own a fluctuating share price, or a business people physically walk into every day?

That shift in thinking has transformed franchising from an entrepreneurial ambition into a serious investment conversation.

The Difference Between Owning Shares and Owning Demand

Traditional stock market investing has always come with volatility, but the last half decade has been particularly extreme.

When Covid-19 struck in early 2020, global markets fell sharply. The S&P 500 dropped by more than 30% in a matter of weeks, while the FTSE 100 experienced one of its steepest declines in modern times. Entire sectors looked vulnerable overnight, and investor panic became widespread.

Then came one of the fastest recoveries ever seen. Technology stocks surged, valuations exploded and liquidity flooded markets. Investors who stayed in often performed exceptionally well, at least temporarily.

But by 2022, the picture changed once again.

Inflation climbed to levels not seen in decades, central banks aggressively increased interest rates and markets corrected sharply. High-growth businesses that had previously enjoyed enormous valuations suddenly saw their share prices collapse. In some cases, companies lost 40%, 50% or even 70% of their market value despite continuing to operate successfully.

For ordinary investors, the lesson was uncomfortable.

Share prices are not purely reflections of business performance. They are reflections of market emotion.

A business may be trading strongly while its stock falls because investors fear a recession. A company may continue generating substantial profits while sentiment turns negative because borrowing costs rise.

That disconnect has caused many investors to reconsider what ownership really means.

Franchise ownership offers something fundamentally different. Rather than relying solely on market sentiment, franchisees participate directly in a functioning business model driven by consumer demand, repeat purchasing behaviour and established operational systems.

In simple terms, they are not investing in speculation. They are investing in customers.

McDonald’s and the Power of Consumer Behaviour

Few companies demonstrate the strength of franchising better than McDonald's.

McDonald’s has built one of the most successful franchise ecosystems in modern business history, with approximately 95% of locations operated by franchisees. Its success offers an important insight into why franchises have remained resilient even during economic uncertainty.

At first glance, it might seem surprising that McDonald’s performed so strongly through periods of economic pressure. During the pandemic, like most public companies, the business experienced share price weakness. In 2020, its stock traded close to the $180 mark before recovering strongly in the years that followed, moving above $300 as consumer confidence returned.

However, focusing purely on the stock price misses the bigger story.

What protected McDonald’s was not investor optimism. It was footfall.

During uncertain economic periods, consumer habits often change rather than disappear. Families may decide against expensive restaurants, but they still want convenience and affordability. A £90 dinner at a premium chain may suddenly feel unnecessary, while spending £25 on a family meal at McDonald’s remains entirely manageable.

Economists often call this the “trade-down effect”, where consumers become more price conscious but continue spending within categories they consider affordable.

This behaviour matters enormously to franchise operators because it creates resilience.

Even during inflationary pressure, people still need fast, convenient meals. Parents still need something quick after work. Travellers still stop for breakfast on long journeys. Teenagers still meet friends after school.

The demand does not disappear. It adapts.

For a franchise owner, that creates something many public investors crave: visibility.

Unlike someone staring at market volatility on a trading app, a franchise operator can physically see demand. They can count customers, monitor transactions and respond operationally.

More importantly, they are not building the business from scratch.

A McDonald’s franchisee benefits from decades of brand trust, national marketing campaigns, supply chain efficiencies, training systems and operational infrastructure. That dramatically lowers many of the risks traditionally associated with entrepreneurship.

Starting an independent restaurant and hoping consumers trust you is one thing. Operating beneath one of the world’s most recognised brands is something entirely different.

Starbucks and the Economics of Habit

If McDonald’s demonstrates affordability, Starbucks highlights another powerful force in franchising: routine.

At various points over the past five years, Starbucks’ share price experienced notable volatility. Inflation concerns, labour costs, slower growth expectations and international market pressures created uncertainty among investors.

Yet despite those concerns, people continued buying coffee.

This may sound simplistic, but it reveals something important about modern consumer behaviour.

Coffee is not merely a product. For millions of consumers, it is a ritual.

Someone commuting to work each morning may spend £4 or £5 on coffee almost automatically. Even during periods of financial strain, many people continue allowing themselves what economists sometimes call “small luxuries”. They may postpone expensive holidays, reduce luxury purchases or eat out less frequently, but the morning coffee habit often survives.

This consistency creates reliable footfall.

A Starbucks location positioned near offices, transport hubs or high streets can generate substantial repeat traffic simply because human behaviour tends to repeat itself.

For investors exploring franchise ownership, this is significant.

A successful franchise is not just selling products. It is positioning itself inside everyday habits. The more habitual the purchase behaviour, the stronger the resilience tends to be. This partly explains why franchise models continue attracting investors who are increasingly cautious about stock market volatility.

Why Investors Are Moving Towards Tangible Businesses

One of the biggest changes over the past five years has been psychological.

After experiencing repeated market swings, many investors have started looking for something more tangible. Owning shares can feel distant. Performance is influenced by factors completely outside of your control, from monetary policy decisions to investor sentiment in countries you may never visit. Franchise ownership feels different because it is visible.

You can see customers coming through the door. You can assess performance in real time. You can improve service, increase efficiency and influence outcomes directly. That sense of involvement matters.

Of course, franchising is not risk-free. No business model guarantees success, and poorly managed franchise operations can fail like any other enterprise. However, compared with independent start-ups, franchises often provide significantly stronger foundations.

Established systems, recognised branding and proven operating procedures reduce uncertainty.For investors who no longer want to rely entirely on unpredictable markets, this becomes increasingly attractive.

It is no coincidence that demand for franchise opportunities has grown during a period where confidence in traditional investing has occasionally been shaken.

A Different Way of Thinking About Wealth

The last five years have exposed a simple truth: markets can move dramatically, but consumer habits are often surprisingly stable.

-       People still buy coffee.

-       Families still need affordable meals.

-       Consumers still gravitate towards trusted brands during uncertain periods.

Businesses such as McDonald’s and Starbucks demonstrate that strong franchises are often powered by one of the most valuable assets in business: predictable human behaviour.

That is why more investors are beginning to see franchising not simply as business ownership, but as a strategic investment approach. In an increasingly unpredictable world, many are asking whether they would rather own a fluctuating stock price or a business customers continue walking into every single day. For a growing number of investors, the answer is becoming increasingly clear.