Franchise Bright Sides
Health and wellness, economic opportunities drive franchise growth in 2011
In recent years, trendy concepts have flooded the franchise market. Just count the number of self-serve frozen yogurt and gourmet burger brands that have surfaced.
According to Mark Siebert, franchise consultant and CEO of iFranchise Group, the economy has caused consumers to trade down, making these franchise types a popular, affordable splurge. "They probably have another three years of continued aggressive growth before we start seeing market saturation," Siebert tells Fare Digest.
What does Siebert see as the next big concepts? A recent report from iFranchise Group identified the following themes dominating the franchise arena:
- Innovative and healthier foods;
- "Green" products and services;
- Health and wellness businesses;
- Low cost and other market-appropriate concepts.
[image-nocss]According to Siebert, there is significant opportunity for any kind of franchise, especially with a real estate market that remains soft. "Landlords are beginning to negotiate for the first time in decades across the geographic board," he says. "Our franchise-related sales business hit double the record in 2010 compared to 2009, and we expect to surpass the 2010 record by July of this year."
The U.S. Census Bureau likewise sees a bright future for franchising. Its reports show 10.5% of all businesses with paid employees were franchises in 2007, the latest data year, and that those businesses generated a hefty $1.3 trillion in annual sales.
Franchisors can thank the recent economic slowdown for this boom, says Siebert, as laid-off husbands and wives have quickly become the fastest-growing segment of franchise purchasers.
"There are a lot of long-term unemployed who are looking to make the money they used to make," he says. "The trends seeing the fastest growth involve fitness franchises and other offerings related to healthy eating, especially in the fast-food natural and organic segments."
Expect more eateries like PowerPizza, whose niche is offering low-fat menu items with macrobiotic ingredientspredicted to do particularly well with baby boomers. "As this generation gets older, they are thinking more about their food intake, which will be a significant trend going forward," says Siebert.
AARP International predicts the baby boomer bulge will continue padding the senior population year after year, growing to one in five U.S. residents by 2030.
Meanwhile, the tight credit market and limited cash flow has formed a unique trend that's gaining steam: low-cost franchises. These can be started for a fraction of a traditional brick-and-mortar franchise such as McDonald's, and be run with very little overheadsome even run from a home office.
In the franchise world, says Siebert, there's a saying: Never waste a perfectly good recession. "As callous as that may sound, it's the truth because now is the time to get into one if you have the right concept," he explains.
"Franchisees can expect to have their pick of great sites, affordable costs and a plethora of available workers throughout 2011. It's going to be a boom year for franchising no matter which trend you choose to follow."
Click here for Entrepreneur's list of Top 10 Franchises for 2011. No. 2 on the list, pictured above, is ampm.