Hot Franchising Trends for 2007
Which types of franchises boast standout growth? Here's what's happening in the industry.
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This story first appeared in the January 2007 issue of Entrepreneur. To receive the magazine, click here to subscribe.
- Senior-care services: As America ages, the senior-care industry is maturing beautifully. Growing 342 units in 2006, established franchises are flourishing and new ones are emerging. Franchising only since October, Caring Transitions specializes in senior home transition and the liquidation of personal belongings, usually in the event of death. CEO Gary Green aims to have 30 to 50 franchises throughout North America within the company's first year. Adds Green, "There's a huge need for this."
- Personal-care services: Baby boomers may be young at heart, but their desire to look young as well has spurred the growth of franchises offering laser, skin-care, med-spa, massage, fitness and tanning services. "Twelve thousand people turn 50 every day in the U.S.," says Charles Engelmann, CEO of Radiance Medspa. Engelmann believes the key for continued growth in the industry is education about the services. "Less than 10 percent of the American public is aware that these treatments are available," he points out, "and less than 4 percent have actually experienced them--it's already a multibillion-dollar industry."
- Enrichment learning programs for kids: When it comes to learning programs for children, the segment increased by 850-plus units, but 2006 also saw diversification with new types of programs, such as a cooking school and an abacus learning program. Obviously, the franchising industry remains focused on children--and children's education in particular. According to educational market research and consulting firm Eduventures LLC, revenue for assessment, tutoring, test-preparation services and supplemental content suppliers grew 6 percent to $21.9 billion in the 2004-2005 school year.
- eBay drop-off stores: The largest global online marketplace has been creating opportunities for all, including franchises that list and sell items for those lacking eBay savvy. While the early-established eBay drop-off franchises like iSold It generally dominated the market, a few fearless competitors joined the race in 2006. Meanwhile, eBay is still going strong, with users worldwide trading more than $1,590 worth of goods on the site every second.
- Food: Franchises and their customers will never go hungry. Franchises serving up salads and smoothies enjoyed healthy growth last year, a couple of chicken-wing newcomers made their way into this year's listing, and coffee franchises are holding their own (even major players Burger King and McDonald's have upped their gourmet coffee offerings to capture a portion of the coffee profits). Additionally, nonrestaurant food-related franchises are growing: chocolate fondue, food as gifts (like fruit baskets) and wine, to name a few.
- New and unique concepts: Hamburgers and pizza will always be American classics, but innovative, original and sometimes wacky franchise concepts are starting to shake things up. Cereality has made it big with endless hot and cold cereal options, Miami Rice Pudding Co. offers more than 30 flavors of rice pudding, and P.B.Loco keeps things nutty with its extensive line of savory and sweet peanut butters. Says Ken Hall, co-founder of P.B.Loco, "Our market research showed [that] many successful companies take existing products and either add a new twist or improve on them."
- Business consulting/staffing: Every business needs help sometimes--and that need is keeping business consulting and staffing franchises growing. In addition to nearly double the number of business consulting franchises, there is also a new emphasis on companies offering small-business and franchise-brokering/consulting services. Regarding staffing, we saw significant growth among the larger companies in 2006, and it looks as if franchises might be making a comeback in an industry they once dominated. "Some companies are making franchising a large part of their growth strategy," says Richard Wahlquist, president and CEO of the American Staffing Association in Alexandria, Virginia. The Bureau of Labor Statistics predicts staffing services will be one of the fastest-growing industries over the next five to 10 years.
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