Franchise Buying Guide

In the Know

eBay Consignment Stores
Presented by Guidant Financial
Guidant Financial specializes in helping entrepreneurs purchase new franchises using their retirement funds.

We predicted that eBay consignment stores--businesses that assist individuals by selling their merchandise on eBay--would grow last year. Well, they certainly delivered the goods. Some prime examples are iSold It and QuikDrop, both of which started franchising in 2003 and have already managed to rank in this year's Franchise 500®.

Offering a simple model that requires no inventory, along with the potential for great profits, franchisors are finding eager buyers. Meanwhile, franchisees don't have to worry about a lack of customers. "While there are 168 million people worldwide who are registered eBay users, there are a lot more who aren't," says Hani Durzy of eBay. "If these stores give people the opportunity to participate in the eBay marketplace, then we say 'great.' It's a win-win situation for everybody."

As for eBay, it's only growing bigger and better. According to Durzy, during the third quarter of 2005, a total of $10.8 billion in goods were traded on eBay, and eBay International's net revenue hit $408.9 million. With a force this strong backing the industry, it's no wonder a growing number of franchisees are clicking the "Buy It Now" button.

We've been touting the popularity of pet franchises for a while, but the possibilities have reached such a crescendo that we can't help barking about it some more. This year's Franchise 500® includes a wide variety of pet businesses, from sitting and walking to training and supplies. The pet industry is big, and it's only going to get bigger. According to the American Pet Products Manufacturers Association, 69.1 million U.S. homes have a pet. And for the most part, these aren't just domestic animals cohabiting with humans. Pet owners adore their furry friends so much that they treat them like family, and aren't afraid to spend lavishly on products and services ranging from gourmet treats to mobile pet grooming. The APPMA estimates $35.9 billion was spent on pets in 2005, up from $34.4 billion in 2004.

Andrew Brooke, president and CEO of the U.S. division of Bark Busters, an in-home dog-training franchise, predicts that spending will continue to increase over the next decade, if not longer. "What you're seeing now in the boom has really only begun," he says. "Usually, when there's a wave that people jump on, that wave started a little earlier and people try to ride that wave in. Well, this wave will hold for a long time."

Kids' Specialty Services
Franchising trends may come and go, but kids' specialty services remains constant. Children-focused franchises--whether they specialize in fitness, art classes or science activities--grew in the past year. Franchises operating for the good of kids are sure to appeal to parents who want the best for their children and are willing to pay for it.

Schools are also willing to pay for it--at least when it comes to tutoring services and enrichment programs, partly due to the No Child Left Behind Act of 2001. According to Tim Wiley, an analyst with Eduventures Inc., a Boston-based research and consulting firm for the education market, schools that don't meet "adequate yearly progress" standards must provide students with supplemental education service activities. As a result, federal funding of about $2 billion a year is being provided for such activities as tutoring and enrichment programs. Since the majority of schools don't have in-house tutoring programs, many are turning to third-party providers such as franchises and will continue to do so, Wiley predicts, until they can establish their own programs.

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This article was originally published in the January 2006 print edition of Entrepreneur with the headline: In the Know.

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