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Franchise Buying Guide

Trend Watch: Child-Focused Franchises

If the increasing popularity of education services, toy stores and kids' gyms is any indication, you can be sure the children's franchise industry is growing big and strong.
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Eager to please, franchisors are catering to children's alterable moods and changeable interests, coming up with innovative ideas while serving the most basic of needs. Whether it's children's furniture, education or fitness, success for these franchises can usually be measured by the size of the customer's smile.

Franchises are also measuring the size of the market, as Census figures indicate there are approximately 40 million kids in the United States under age 10. Marketing expert and American Demographics founder Peter Francese also credits this industry's strength to better market research, directed to a more educated consumer. "The industry has prospered because of [companies'] abilities to target consumers and create products they want and will buy," he says.

Hot in the beginning, prosperous now and promising for the future, the children's franchise industry has attracted long-term players who have left their marks, have achieved financial success and now offer a wealth of insight for people wanting to get into this industry.

Knock Knock, Who's There?
For Fred Meyer, it was natural to take over the toy store his father had opened in Battle Creek, Michigan. In 1947, Meyer's father proved to be ahead of his time when he recognized an opportunity in selling toys to the baby boomers. In 1990, Meyer identified the growth potential in converting his father's business into a USA Baby franchise. His first priority was to find the right niche, and furniture represented a stable bet in the industry. But, as Meyer has discovered, staying up to date with the changing demographics of his clientele has been equally crucial. In the years since his father first opened the business, grandparents and older mothers have emerged as target customers.

Grandparents have become some of the most significant consumers in the industry. According to the AARP, people over 50 earn a total of almost $2 trillion annually and represent more than 50 percent of total discretionary spending power. In a 2002 study, AARP found that grandparents 80 and older are likely to spend $1,000 to $2,499 annually on their grandchildren. Meyer even incorporated them into his marketing strategy by using "Grandparents' Favorite Toy Store" as his slogan one year.

Another trend children's franchise owners point to is women having children later in life. Meyer has seen an increasing number of 40-year-old mothers-to-be who are more educated, more financially stable and more sure of what they want.

As long as babies need cribs, Meyer's niche is secure, but true prosperity requires staying current. "We want to make [the customer] feel good about shopping in our store," he says. Meyer predicts a 10 percent increase in sales for 2003, but while other USA Baby franchisees open their second and even their third stores, Meyer is happy sticking with his father's original store.

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This article was originally published in the June 2003 print edition of Entrepreneur's StartUps with the headline: Trend Watch: Child-Focused Franchises.

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