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Good as Gold

Wondering what the hottest franchising trends are for 2004? Wonder no more.

Much of the recent success in franchising can be traced to two demographic trends: Americans are getting older and feeling pressed for time. Not good news for Americans in general, but in franchising circles, that means booming business. Whether seeking care for seniors or children, help around the house or a quick meal, consumers will spend on any service that makes their complicated lives a little easier.

In fact, we're already seeing the effects in this year's Franchise 500®-certain categories recorded dramatic growth in spite of a weak economy. Here's a look at some of the hottest franchising trends for 2004 and beyond:

Senior Care
Perhaps the most stunning growth of the past year has occurred in the senior-care segment of franchising. Seven senior-care companies in our Franchise 500® ranking grew a total of 370 units in just one year, averaging more than 52 units per company. The franchises ranked in this category grew almost 39 percent in the past year.

Despite the large increases, this market has by no means peaked. "By 2010, 39 million Americans will be 65 or older. That's almost 20 percent of the population," says Joel Libava, vice president of the Cleveland office of FranNet, a franchise consulting firm. "Anything that relates to seniors, whether it's senior care or services that save seniors time, is going to be popular" for some time.

According to the Department of Health and Human Services Administration on Aging, about 30 percent of noninstitutionalized seniors live alone. Many of them need extra help around the house and seek companionship and assistance with daily activities.

"Numerous studies point to the same trend: As we age, we want to stay in our own homes," says Allen Riggs, president and COO of Comfort Keepers, a nonmedical in-home senior-care provider that gained more than 100 units this year. "Even if assistance is needed, people want that assistance in their homes."

Seniors 68 and over account for 14 percent of spending power in the United States, totaling about $588 billion, according to a 2002 study by American Demographics magazine and software company MapInfo. Health care is the top spending priority of this group-they spend 67 percent more than the average consumer on medical services and supplies.

As the nation ages (older boomers start turning 60 later this decade), this segment will grow. "Elder care will replace child care as the number-one social issue in North America," predicts Jeff Huber, vice president of franchise development for Home Instead Senior Care, a franchise that grew from 356 to 448 units over the past year.

Kids
"Parents want their kids to have fun and be [well-educated], and they'll spend money [to ensure this] in good times and bad," says Steve Hockett, president of FranChoice Inc., an Eden Prairie, Minnesota, franchise consulting firm.

In our Franchise 500® listing, the children's products and services segment enjoyed steady growth over the year-about 6 percent growth in learning and 18 percent growth in fitness. Also, for 2004, children's products and services ranked as one of the top 5 overall categories in terms of unit size. In the first Franchise 500® in 1980, the category was barely noticeable.

So what's changed? Spending on children is now being fueled not just by boomers, but by Generation X, a group that boasts $736 billion in spending power and includes many new parents.

Another major change in the market over the past 25 years is the proliferation of the dual-career family. "This has become the model American family, and child care is the most significant decision these parents have to contemplate," says Lisa Fisher, marketing and PR manager of Goddard Systems Inc., an education-based child-care franchise with about 145 franchised units.

Like the children themselves, the opportunities in this sector are multifaceted. According to some in the industry, this is an ideal time to enter the education sector. "Our franchise inquiries have been on the rise because parents want to make sure their children are prepared for college and the higher demands of today's work force," says Mark Mele, assistant vice president of franchising for Kumon Math & Reading Centers, a supplemental education program with more than 23,000 units worldwide.

Families are also looking for enrichment programs. "Parents want programs that round out a child's skills and open them up to explore new possibilities," says Doug Howard, president of Drama Kids International Inc., an after-school drama program with 117 franchises.

Kids' fitness programs are also growing "because of the national concern over fitness and rising obesity rates in children," says Caryn Burnier, franchise sales director with Stretch-N-Grow International, a children's fitness franchise that added more than 50 units last year.

"We expect to see more children enrolled in fitness programs in the coming year," says Jerry Perch, vice president of sales and marketing for the 92-unit Kinderdance International Inc., a dance, gymnastics and movement program for children ages 2 to 8. "Parents are becoming more aware of the need for good developmental programs."

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This article was originally published in the January 2004 print edition of Entrepreneur with the headline: Good as Gold.

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