Coming of Age

We're not talking kid stuff--the booming children's market is serious business, and franchisees are reaping the rewards.

The franchising industry is aging beautifully, but there's one segment of it that stays forever young. Youthful, energetic, ever-growing and impulsive, the kids' market definitely reflects its target population.

While kids hold the key to our future, they also control their parents' purse strings. American families spend approximately $115.6 billion a year on their children for food, clothing, personal-care items, entertainment and reading materials, according to a 2006 report by Packaged Facts. This figure is expected to increase to $143 billion by 2010. Meanwhile, the buying power of kids themselves now tops $18 billion. Kids may be small in size, but spending by them, around them and for them represents a powerful market opportunity too big to be ignored.

Much of the reason the children's market has taken off is the fact that the traditional single-income family is rapidly disappearing. "[There is] increased attention on children and the idea, especially in dual working households, of parents trying to juggle work time, quality time and family time," says Paul Kurnit, founder of KidShop, a marketing communications firm specializing in the youth market.

At the same time, today's parents want to provide their children with every possible advantage and believe this can be achieved through their participation in a variety of extracurricular activities. "The whole dynamic has changed dramatically from the '50s and '60s, [when] children were seen and not heard, to today's children being very active members of the family," says Kurnit.

The franchise industry has long been meeting the demands created by dual-income families with active children. From serving the most basic of kids' needs by offering day care to dishing out the fun with ice cream parties, all the bases are covered when it comes to kids. Kid-related franchises are at the top of their game, and the growth spurt has been most significant in three categories: sports, education and parties.

Childhood obesity first started making headlines years ago, but the startling reality of the poor health of today's youth is still top of mind for most parents. And it should be: Approximately 30.3 percent of children ages 6 to 11 are overweight, and 15.3 percent are obese, according to the American Obesity Association, an organization focused on changing public policy and perceptions about obesity. "In the kids' market over the past three or four years, there has been a tremendous outpouring of concern about childhood obesity from government agencies and parental groups," says Bob Brown, co-author of the Packaged Facts report. "This huge public health problem has actually created opportunities for [entrepreneurs]."

In addition, report co-author Ruth Washton points to a growing trend of kids having their own personal trainers and suggests there's more to it than just health. "Parents in the higher socio-economic levels are willing to shell out big bucks for their kids," she says. "It relates to more than just keeping them fit, but also keeping them competitive."

Whatever the motivation, the effects have trickled down. According to the International Health, Racquet and Sportsclub Association, the number of health club members under age 18 has increased 178 percent since 1990. Meanwhile, franchises offering fitness and sports instruction to kids have enjoyed notably healthy growth. There are franchises such as The Little Gym, which focuses on children's development and fitness; Frozen Ropes, a baseball and softball instruction franchise primarily for 8- to 12-year-olds; and Gymboree, a parent/child play program. With fitness as its focus, this category as a whole gives franchisees and children a solid dose of a good thing.

According to the Packaged Facts study, 13.4 percent of preschoolers get information about products online, and 4.4 percent actually follow through to make a purchase (all with their parents' help, naturally). It's a brave new world, and franchises zeroing in on tutoring and enrichment in areas including technology, art and drama are growing dramatically.

Anne Dolan offers computer education to 3- to 6-year-olds in day-care centers and Montessori schools throughout St. Louis. She has owned her CompuChild franchise since 1996, teaches 420 students per week and has been able to weather national disasters like 9/11. "When I was growing up, it was paper and a pencil," says Dolan, 50. "Now it's a computer. And kids definitely need to know how to use it. So parents want their children to learn how to respect it and turn it on and off properly. They want that, so they pay [for it]."

Meanwhile, shifting priorities in the school system spurred by the No Child Left Behind Act of 2002 have increased the need for tutoring services and forced parents to look outside the public school system to complement their children's education. "There has been a huge emphasis placed on literacy, mathematics, test-taking and meeting standards with schools," says Mary Rogers, co-founder of Abrakadoodle, a franchise offering art education classes for kids. "Often, the funds that have previously covered the arts programs and the PE programs are being diverted into test-taking programs." Rogers also remarks that today's parents are better educated than they were 15 years ago, and consequently they're placing more importance on learning and enrichment opportunities for their children.

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This article was originally published in the August 2007 print edition of Entrepreneur with the headline: Coming of Age.

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