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What is the Future of Franchising in 2020?
by Dean L Swanson
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July 29, 2021
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Insights on the Best Investments with Changes in Franchise Operations

A local business investor asked me to do a column on Franchising and to give some insight about what seems to be the best investment when we are seeing a lot of change in many franchise operations.  Therefore, this may be a good time for both reflection and forecasting for the franchise industry. I will rely on information from my friends at FranNet whose mission is to assist individuals with the entire franchise process – from franchising an existing business to purchasing or selling a franchise.

When you purchase a franchise, you are paying a price to be a part of a that franchise.  You are investing into a system of doing business, and they train you to be proficient. It buys a brand name and standards to insure your customers will experience the same high quality standards in every unit of that franchise. I ask these potential CEOs to be very familiar with what the franchisor provides and ask yourself if you are willing to follow their procedures. If not, do not make an investment in a system you will not use.

As 2019 comes to a close and the dawn of 2020 breaks, there are untold numbers of budding entrepreneurs who have decided that this is “the year” to finally take the proverbial plunge and become a business owner. These individuals have the same thoughts and questions you might also be pondering.  That is, what were the top franchise categories and trends this past year? Will they be the same next year?

Everyone who goes into business for themselves wants to get it right and find that one true franchise concept that matches up with their income and lifestyle goals. Wanting to spot the top-performing or trending opportunities is a natural reaction. Yet ask a dozen different sources, and you may get a dozen different answers. But there is a way to cut through any inherent bias in the process. Sources such as the International Franchise Association (IFA) and Franchising Media Group can provide an outlook based in fact, but it’s always advisable to do your due diligence when researching subjective questions such as these.

Franchise trends

Most industry experts and media outlets agree on the following common denominators when it comes to spotting the trends in the franchise marketplace for 2019 and into the year 2020:

Demographics are boosting the franchise industry.  Three specific examples show how certain demographics are positively affecting the business of franchising. The Millennial Generation, now surpassing 70 million in the U.S., has reached maturity in terms of their purchasing power. The demand for a wide range of products and services sold by franchisees has followed suit. Yet, Baby Boomers refuse to hand over the keys— grabbing a lopsided share of the small business market with their lifetime of saving and investing. They remain a franchisor’s strongest target market. Lastly, Seniors are finally aging out of the workforce, but driving a phenomenal health and wellness boom—an industry where franchising is noting some of its strongest growth.  

The Multi-Unit Craze.  Franchising has noted a steady interest in opening not just one franchise location, but multiple units, in the quest to establish a small business empire. As it stands today, more than half of all franchise units in the U.S. are owned and run by multi-unit operators. They’ve taken full advantage of the semi-absentee business model, thereby allowing a manager to manage the locations. This keeps the focus squarely on strategy, growth, and oversight.  

What are the current top franchise types?

These examples are a little easier to gauge and review, thanks in part to numerous ranking systems that conduct monthly audits of which franchises have generated the most interest in awarding new units. In should come as little surprise that these franchise types typically remain at or near the top of the list:

  • Residential Services
    • There are a whole host of franchise opportunities available in the booming residential services sector. Whether consumers are looking for house cleaning, tree trimming or general handyman services, this franchise category is hotter than ever. What’s driving this interest? Consumers are turning to outsourced options for things they used to do on their own. The reasons for this trend include increasing age, convenience and possibly the biggest factor of all—the time and hassle saved by having someone else worry about ongoing maintenance and upkeep.
  • Health and Wellness
    • This type of franchise has the advantage of a dual appeal. There are health-related franchise operations such as gyms, boutiques, and innovative workout concepts, but there’s also wellness, which extends deep into the spa, beauty and studio environment. Consumer interest in looking and feeling their best isn’t likely to wane in the foreseeable future.  
    • Top franchise trends and types are worth a cursory review, but avoid letting subjective information cloud your judgment. When engaged in the investigative process, it's important to evaluate your income and lifestyle goals before reviewing concepts. Determining the potential revenue of a franchise is important, but to gauge a brands’ overall health, research its recent unit growth statistics, its yearover-year success rate and the all-important Item 19, located in the Franchise Disclosure Document (FDD). That’s where you’ll find accurate statistical analysis related to a brand’s financial performance.
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About the author
Dean Swanson
Dean L Swanson
Dean is a Certified SCORE Mentor and former SCORE Chapter Chair, District Director, and Regional Vice President for the North West Region, and has developed and managed many businesses. The Rochester Post Bulletin publishes his weekly article on a topic geared toward the small business community. The articles here are printed in their entirety.
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