2006 Franchise Trends

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2006 Franchise Trends

6/14/2007 - by: Joel Libava - President, Franchise Selection Specialists Inc.

Lots of jaded corporate employees today stand ready to put their skills to use to profit themselves instead of their employers. Add to that a newer generation of future business owners, known as the "active" Baby Boomers, who aren't quite ready or able to retire.

A large portion of these people are finding outlets for their skills and retirement time by turning to a $1.5 trillion dollar industry, the franchised business. That, according to The International Franchise Association (IFA), is the annual retail sales figure which franchising produces – 40 percent of all US retail sales – from roughly 760,000 franchised small businesses in more than 75 different industries across the United States.

Franchising employs an estimated 18 million, and a new franchise opens its doors every eight minutes.

2006 looks to be another strong year in the franchise industry, with several categories being especially robust.

Baby Boomers will play a major role in the growth of franchising. The oldest boomers will be turning 60 in 2006, according to the Social Security Administration. Over the next three decades, 76 million Baby Boomers will reach retirement age, says the U.S. Census Bureau.

Who are they? Described as DINKs (Double Income No Kids), they're generally active and healthy, and won't settle into a retirement passively watching time go by. Instead, they'll want to make a difference in others' lives, and one way to do this is to get into their own businesses, for a number of reasons. They may want to help their children and grandchildren experience business ownership, becoming active investors. Or, they may want to add to their existing income and build equity for themselves.

Here are some categories expected to heat up in 2006:

Fitness and weight loss franchises
The fitness and weight loss categories experienced significant growth last year, and all signs indicate no slowdown. Obesity and diabetes remain still prevalent issues that affect the industry. The strength in these categories – unlike hot diets of the past few years – is not a fad. With the US Government releasing new "food pyramids," more people realize that balanced diets and moderate exercise are the "prescription" for the great and consistent results they want. Compare this to the Low Carb, West Coast, South Florida diets and others, which may bring fast results, but are not proving to be long-term solutions for most.

Two womens-only express workout franchises, Shape Express, and Slim and Tone, are two that have experienced rapid growth. Men are not being left out, with newer mens-only concepts like Personal Training Institute (which offers one-on-one nutritional counseling) and Cut's Fitness For Men.

Business Service franchises
These franchise concepts help small businesses outsource their needs for everything from signage to IT services. With small businesses driving our nation's economy, franchises that provide services and products to help them grow are crucial and always in demand.

Franchise companies like Sparkling Image, which provides sanitization of commercial and public restrooms, may not seem like the most glamorous opportunity, but they address both the huge general public concern about health and the specific need that businesses have to provide clean facilities in order to ensure repeat business.

All businesses need products like signs and banners to advertise, and a company like Signs by Tomorrow has franchises nationwide that produce and design those much-needed products.

As internet shopping experiences grow more positive, online purchases grow in sales volume. Some customers are even becoming "sellers" of items in their homes, etc. PostNet handles shipping, packaging, copying, and printing, all services that are used daily by both consumers and businesses. Postnet has grown well beyond 1,000 franchised locations, and is now expanding internationally.

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Home Improvement franchises
The strong housing market is driving growth in home improvement. According to Standard & Poor's semi-annual survey of the household durables industry, published in October 2005, "the demand for household appliances and home furnishings is rising steadily in step with a strong housing market and the trend is likely to continue." Some franchises will continue growing with these trends. These include V2K Window Coverings, which helps homeowners to update their older homes or decorate their newly built or bought ones. Outdoor Lighting Perspectives adds dramatic outdoor lighting effects to homes, while DOTI (Designs of The Interior) provides beautiful custom decorating ideas and furniture to beautify living spaces.

Basic Consumer Service franchises
Dual-income families with no time (DIFWNT) is a continually growing demographic for two decades. For working couples with children, weekdays can be adventurous, and after-school soccer practices, musical instrument lessons, and doctor's appointments can eat up time needed for household duties. Molly Maids is one franchise that offers residential cleaning services to help relieve some of the everyday stresses of running a busy household.

A new generation of adults has entered the scene, and they are not skilled in fixing things around the house or installing extra phone jacks. Mr. Handyman is one of several household repair franchises that are thriving. They sold 60 new franchises in 2005, and are up to 190 nationwide.

HR Staffing and Consulting franchises
According to The American Staffing Association, contract and temporary staffing services had combined sales of $16.9 billion in the second quarter of 2005. First, a growing shortage of skilled workers is helping fuel the growth of franchises like Express Personnel, with over 500 locations worldwide. Second, there's a growing labor pool of older workers who still want to work and can add value to a company. A 2003 AARP-Roper survey revealed that this trend is expected to keep growing, and states that 55 percent of retirees would like to work part-time for either income or enjoyment. As a bonus for employers, older workers can usually move through training programs faster, adding efficiency to management.

Unique and New Niche businesses franchises
Entrepreneurs create new ideas and new niches almost daily, by entrepreneurs. Filta Fry has specially equipped vans that filter cooking oils for restaurants, helping to improve taste for their diners.

Drive-N-Style offers automobile interior customization such as wood trimmed dashboards and custom leather seats, and exterior customization such as chrome accessories, and "ground effects."

Finally, a new industry called "sports enhancement" is evolving, with High Intensity Training Centers franchise leading the way. Started in 2000, "HIT" Centers offer workout programs for athletes of all ages who want to speed up their strength training for sporting activities.

If you're a prospective franchise owner, continually monitor trends to find franchise opportunities that will provide you with years of prosperity. "Hot" franchises tend to come and go, but trends last longer. The trick? Get involved early enough to get the territory/location you want – one with the largest growth potential. "Equity" should be one of the most important words you remember during your investigation and decision process.


author: Joel Libava, President of Franchise Selection Specialists Inc., brings a host of tools, skills, and real world franchise industry experience to his clients, coming from a franchise management background in the automobile and restaurant/hospitality industries.

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