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.
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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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