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Have You Heard the Latest?

Want to build a hot business in 2003? These areas of franchising may be your best shots at getting there.

Within the rankings of the Franchise 500® are companies, both new and old, spanning a variety of industries, from fast food to home improvement, clothing resellers to automotive repair shops. In 2003, some segments will rise above the rest, adding both franchisees and customers.

Working on the Franchise 500®, we at Entrepreneur get a first look at some of these emerging franchise trends, segments benefiting from the addition of new concepts, new customers and increased revenue. What have we noticed this year? Though on the surface, fresh-Mex fast-casual restaurants, senior care, child care, specialized fitness, tech consulting and home improvement may seem to have little in common, each of these segments is making plenty of noise in the world of franchising.

Mexican food in general has been growing in popularity nationwide, thanks in part to the country's growing Hispanic/Latino population, which has expanded 57.9 percent over the past 10 years and now accounts for 9 percent of the U.S. population.

Their influence is spreading to mainstream America, which now sees Mexican food as a welcome alternative to standard meat and potatoes--or, rather, hamburgers and french fries. Another timely boost to the market: Fresh-Mex chains like Desert Moon and La Salsa are luring customers with healthy fast food, offering menus featuring grilled steak and chicken and fresh vegetables.

Not wanting to be left behind, McDonald's added Mexican items like tortas to its menu a few years ago and now has a majority interest in Chipotle, a burrito bar concept, while Wendy's acquired Baja Fresh, a fast-casual grill franchise. "Mexican food is one of the fastest-growing segments in our industry," says Russ Smyth, president of McDonald's Partner Brands. "It was a great place to start when McDonald's began looking for ways to serve customers more variety in tastes and experiences."

The heat of the segment and the strength of McDonald's are definitely in Chipotle's favor. "Chipotle has grown significantly since we invested in them, and that growth will continue to accelerate," Smyth says. "Based on what we see in the market and the reactions of customers, there's tremendous future growth potential for Chipotle, particularly with the full resources of the McDonald's system behind it."

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This article was originally published in the January 2003 print edition of Entrepreneur with the headline: Have You Heard the Latest?.

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