Checking for Seasonality in Franchises

My Story: The Off-Season Reality

I run Tippi Toes Dance, a mobile dance company that teaches kids ages 2–6 inside preschools and daycares. We knew there would be some seasonality, but two major surprises hit us:

1. The slow season lasted longer and cut deeper than expected.

2. The alternate revenue streams (like summer camps) were far harder to set up than expected.

Here’s what that looked like in real numbers:

• Peak Season: ~400 students × $72/month + $55 registration fees ≈ $30,000/month

• Off Season: ~250 students × $72/month (registration waived) ≈ $18,000/month

• Extra Costs: Kept a part-time manager on payroll (took 4 months to hire so we weren't getting rid of her), plus ~$500/month in recruiting since many college-student teachers leave in the summer.

We’re currently in mid-August, still down 37% from peak enrollment, with no rebound yet. Stressful, but if this fall mirrors last year, we’ll recover strong.

What Is Seasonality?

Seasonality is a predictable downturn caused by external factors like weather or the school calendar. For franchisees, this creates two very different experiences:

• New Owners: You will feel stress, anxiety, and hard choices. You don’t know how bad it will get, so you hoard cash in the good months and hope the upswing covers the slump.

• Experienced Owners: They exude preparation and patience. They use downtime to rest, take vacations, recruit, and invest in growth for the next surge.

Why You Must Ask About It

If you are considering any franchise, you should ask the franchisor about seasonality and how they deal with it. Good franchises will honestly and bluntly talk about the seasonality. They should clearly tell you how long it lasts, how deeply it affects the business, what they do in the off-season, and how new owners deal with it. Mediocre or bad franchises will not have a plan and will deny the off-season being that big a deal. They may speak in vague terms and will put off any detailed discussion to "another call" and hope you forget about it.

• How long does it last?

• How deep is the revenue drop?

• What do they do in the off-season?

• How do new owners survive their first slow cycle?

Good franchisors are blunt about these realities. Bad ones deny or downplay it, hoping you move on without details.

The Mirage of Off-Season Revenue Streams

Some franchises may tell you that they have off-season specific revenue streams. This can be extremely challenging to execute well your first few years if the franchisor isn't heavily involved in the marketing. The first year or two you will be focused on learning business in general as well as the specifics of this particular franchise.

To suddenly learn a new skill, market to a new audience, or hire new people can be overwhelming if you aren't an expert in the core business yet. If the franchisor claims to have new revenue streams, even if they are tangentially related to the core business model, you need to dig in deep to find out how you will gain clients and how you will execute on this new offering.

Be cautious. In practice, these can be:

• Hard to market (you suddenly need to advertise to the public instead of selling to a captive audience).

• Operationally complex (finding/renting space, managing new staff schedules).

• Poorly supported (franchisors often sell the idea but don’t provide real marketing help).

Example from my business: Tippi Toes suggests summer camps. But unlike in-school classes:

• We must market directly to the public.

• We must rent space.

• We need teachers who accept unpaid gaps or seasonal work.

Realistically, most new owners won’t be in a position to even attempt this in Year 1 or 2. Yet it’s often presented as “plug and play,” so owners build it into their financial models when the odds of success early are slim.

What “Right” Looks Like

Consider a line-striping franchise in cold climates. Snow and ice could shut operations down for months. But the franchisor designed a workaround:

• Crews stripe inside garages and warehouses during the cold months.

• Same sales approach, same pricing, minimal extra equipment.

• Franchisees stay busy year-round.

This is strong franchisor support: practical, realistic, and easy to execute.

How to Find Out the Truth

Franchisors may sugarcoat, so use a three-pronged approach:

1. Ask the franchisor about it and how they deal with it- write this down in detail

2. You ask AI as if you know nothing about the franchise and if there is seasonality. See what it says. Make the suggestions to overcome seasonality that the franchisor gave you, but specifically ask it why these are bad ideas or why it might be hard for a first time owner to do these things.

3. Verify with a lot of franchisees and ask them to be specific.

• What are monthly revenue numbers before the off-season and during the off-season?

• How long did it take until you started your additional off-season revenue streams?

• How much extra marketing did you do and how much ad budget do you spend leading up to the off-season?

• It is ok to get into money questions because they were in the same place you were at some point.

My mistake: I asked vague questions and got vague answers. I should have pressed harder on numbers, marketing spend, and summer program challenges. I also didn't ask them how large their summer programs were, how much they spent on marketing for them, where they host them, and what were the challenges in setting them up. This would have given me the ability to better prepare for my first real off-season.

Is Seasonality a Dealbreaker?

Not necessarily. It depends on your goals:

• Some owners love seasonality. A mosquito-fogging franchisee in New York shuts down every winter, then vacations with his wife for three months.

• Others won’t touch a seasonal business and see it as a hard red flag.

The key: Know yourself. Seasonality isn’t inherently bad, but it can crush you if you go in blind. You must ask the hard questions, stress-test your financial model, and be honest about your capital, skills, and tolerance for risk.

Copy-Paste Checklist: Ask These in Validation Calls

• How long is the off-season?

• How steep is the revenue drop?

• What’s the franchisor’s exact plan for it?

• How many franchisees actually execute the off-season streams, and how soon in their tenure as a business owner?

• What does the cash flow swing look like month to month?

Bottom line: Seasonality doesn’t have to be a dealbreaker. But ignoring it can turn a good franchise into a nightmare. Get the facts, run the numbers, and decide whether the rhythm of the business fits your long-term goals.

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