Franchise Buying Guide

All the Rage

Wondering what everyone will be crazy about in the coming year? Take a sneak peek at the hottest franchising trends for 2005.
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Guidant Financial specializes in helping entrepreneurs purchase new franchises using their retirement funds.

The vibrant and ever-changing world of franchising is one where anything is possible. And every year, without fail, strong patterns emerge, revealing the industries that hold promise for the year to come. This year is no different. After months of careful research, we are pleased to present the franchise segments that have caught our attention and promise strong growth in 2005.

Expect the next 12 months to bring expansion across a variety of industries. Fitness and weight-loss franchises will grow as Americans continue their battle to get slim, tech consulting will be in greater demand than ever, eBay drop-off stores will spread rapidly, and children's tutoring/enrichment programs and senior care will maintain their spots in the limelight. Some of these trends are already visible in this year's Franchise 500®. So, without further delay, here's an in-depth look at the trends to watch in 2005.

Lighten Up and Get Fit

Whether it's the food or the lifestyle, Americans tend to be overweight. Countless reports, studies and articles affirm this almost daily, and the news is not falling on deaf ears. The overwhelming popularity of low-carb diets alone illustrates the degree to which Americans are focused on the single goal of shedding pounds. In addition, the skyrocketing cost of health insurance has individuals and companies searching for ways to control their medical bills.

Weight control is definitely one of those ways. A 2004 report by nonprofit research group RTI International and the Centers for Disease Control and Prevention estimates that obesity costs the United States as much as $75 billion in medical expenditures annually. "With the cost of health care being what it is, people want to make it a priority to take care of themselves," says Shirley Archer, an author, speaker, and health and wellness educator for the Health Improvement Program at Stanford University in Stanford, California. Consequently, fitness has maintained its place among the fastest-growing categories in this year's listing-and the weight-loss franchise category has been reborn, after having disappeared altogether in 2000.

Fitness franchise Curves International Inc. became an industry leader when co-founders Diane and Gary Heavin recognized and addressed the need to make women feel comfortable while working out. Curves' informal slogan-"No men, no mirrors, no makeup"-continues to strike a chord among women, securing the franchise a viable share of the $14.1 billion fitness industry. Curves celebrated growth of 37.3 percent in the past year and now has more than 3 million members. According to Gary, the first stage of growth-North America-is nearing completion, and phases two and three include opening about 8,000 centers each in Asia and Europe within the next seven years.

Going hand in hand with fitness is weight loss, a category that's also experiencing a revival in this year's Franchise 500®. During the '90s, weight-loss franchise Jenny Craig experienced nearly a decade of stagnant growth-and others followed its lead. "There were some issues in the early '90s around some of the weight-loss programs that were causing health problems," says Doug Fisher, vice president of Jenny Craig's franchise department. "So the industry went through a transition during the mid- to late '90s, where nobody was really growing too much."

However, the calm before the storm has passed. In May 2002, Jenny Craig was acquired by private investment firms ACI Capital and MidOcean Partners, and the franchise is now gearing up for aggressive expansion. According to Vic DeSio, director of franchise development for Jenny Craig, more than 15 percent of the company's centers are franchises. Plans are in the works to eventually increase that number to 40 percent, with the company aiming to open 20 to 30 new centers during its current fiscal year, which ends in June.

Curves and Jenny Craig aren't the only ones capitalizing on this demand. Within the past year alone, we at Entrepreneur have seen the number of fitness and weight-loss franchisors in our Franchise 500® grow from eight to 17. According to the International Health, Racquet & Sportsclub Association, 39.4 million Americans belong to a health club-up from 24.1 million 10 years ago-so there are definitely more than enough consumers joining in to feed this growing trend.

Miracle Growth

These hot industries are on the rise-look how they've grown in the past two years (based on the number of operating franchise units in the United States and Canada).

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This article was originally published in the January 2005 print edition of Entrepreneur with the headline: All the Rage.

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