Franchising has always been attractive to enterprising small business professionals. Not only does it give them an opportunity to own their own business without the burden of starting it from scratch, but it also helps them to do so while using a proven business model.
In the last five years, franchising has seen over 1,000 new brands come into existence, according to John Reynolds, president of the International Franchising Association Educational Foundation, the education arm of the Washington, D.C.-based nonprofit organization for franchise professionals. And of that number, 38 percent were started in the last five years.
According to the IFA, here are the current top five franchising concepts:
- Health/fitness (i.e. gyms)
- Frozen desserts (i.e. smoothies, frozen yogurt, etc.)
- Retail foods (i.e. grocers, food markets)
- Beauty-related (i.e. hair salons, nail salons)
- Baked goods (i.e. bakeries, bagel shops, donut shops)
Reynolds says lifestyle trends among two key demographics—baby boomers and millennials—account for the surge in interest in these particular franchising segments.
“Two things are happening,” says Reynolds. “You have this demographic of older people who are living longer and healthier lives. They’re flowing into all of these health and fitness businesses.”
At the same time, millennials are getting their first jobs or starting their first business. “For them, it’s all about a balance of life issues. It’s not unusual to have conversations with people in this group who say they get up every day at 5 a.m. so they can do their workouts for 90 minutes before they go to their jobs,” Reynolds says. “They work hard but they’re also focused on being healthy. They have more disposable income coming out of the recession and they’re spending it on two things—being healthy and looking good.”
Given the size and spending power of these two demongraphic groups, Reynolds believes the franchising concepts going strong today have staying power. “Businesses don’t come into these markets unless there are demographics to support them,” he says.
For budding entrepreneurs, owning a franchise can be a great investment. But before signing on, it’s critical to do the proper due diligence. Speak with other franchisees to get their take on the business. And of course, read through all the supporting documentation to understand the costs involved upfront and what you’ll be paying in marketing fees down the road.
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