2006 Franchise Trends / Opportunities

Dwindling nest eggs, dead-end jobs, later retirement age possibilities, and corporate downsizing all contribute to the feelings of powerlessness that some of us have. These days, there are a lot of jaded corporate employees ready to put their skills to use to profit themselves, instead of their employers. There is also a newer generation of future business owners, known as the “active” Baby Boomers not quite ready or able to retire. A sizeable portion of these people are turning to the $1.5 trillion dollar industry, the franchised business. $1.5 trillion is the annual retail sales figure which franchising is responsible for according to the International Franchise Association. That figure roughly represents 760,000 franchised small businesses in more than 75 different industries in the USA. In addition, the IFA estimates that franchised small businesses account for more than 40 percent of all US retail sales. Estimates put employment because of franchising at 18 million, with a new franchise opening up every eight minutes.

2006 is shaping up to be another strong year in the franchise industry, with several categories being especially strong. As they do in other facets of life, and as mentioned before, Baby Boomers will play a major role in the growth of franchising.

With the arrival of 2006, the oldest boomers will be turning 60, according to the Social Security Administration. During the next 30 years 76 million Baby Boomers will be hitting retirement age, says the U.S. Census Bureau. This group currently finds themselves in the role of “DINK’S” (Double Income No Kids). They are generally active and healthy, and will not be content sitting around watching the years go by. They will want to make a difference in others lives, and one way to do this is to get into their own businesses. Maybe they will help their own children and grandchildren experience business ownership, becoming active investors. Or, they may want to add to their own incomes and build equity for themselves.   

The following segments are expected to heat up in 2006:

Fitness and weight loss
The fitness and weight loss categories experienced significant growth last year, and all the signs are there to predict no slowdown. Issues such as obesity and diabetes are still prevalent and these factors affect the industry. This is not a fad like the “hot” diets of the past few years. With the US Government releasing new “Food Pyramids ”, more and more people are realizing that a balanced diet and moderate exercise are the “prescription” for great and consistent results. Low Carb, West Coast, South Florida and the like, are diets that may be bring fast results, but are not proving to be long term solutions for most.Shape Express, and Slim and Tone are two women’s only express workout franchises that have experienced rapid growth. And the men are not being left out with newer men’s only concepts like Personal Training Institute which offers one on one nutritional counseling, and Cut’s Fitness For Men. 

Business Services
These franchise concepts allow small businesses to outsource their needs for everything form 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/public restrooms may not be the most glamorous opportunity to get into, but public health concerns are huge, and businesses must ensure cleanliness to keep their customers coming back. All businesses need products like signs and banners to advertise, and a company like Signs by Tomorrow has franchises all over the country that produce and design those much needed products.With the internet shopping experiences getting more positive, more and more customers are making their purchases online.

Some customers are even becoming “sellers” of items in their homes etc. PostNet handles shipping, packaging, copying and printing, all services that are used by both consumers and businesses daily. Postnet has grown to well over 1,000 franchised locations, and are now expanding internationally.

Home Improvement
The strong housing market is driving growth in these industries. According to Standard & Poor’s, in its semi-annual survey in 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 that will continue growing with these trends include V2K Window Coverings, which can help residential homeowners with either updating their older homes, or decorating their newly built or bought homes. Outdoor Lighting Perspectives can add dramatic outdoor lighting effects to homes, and DOTI (Designs of The Interior) can provide beautiful custom decorating ideas, and furniture to beautify living spaces. 

Basic Consumer Services
A dual income family with no time (DIFWNT) are a continually growing demographic, and has been for two decades. For working couples with children, weekdays can be an adventure, between after school soccer practices, musical instrument lessons, and doctor’s appointments; there is not much time for household duties. Molly Maids is one franchise that offers residential cleaning services which can 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 when it comes to fixing things around the house that break, 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
According to The American Staffing Association, contract and temporary staffing services had combined sales of $16.9 billion in the second quarter of 2005. The growing shortage of skilled workers is helping fuel the growth of franchises like Express Personnel with over 500 locations worldwide. In addition there is a growing labor pool of older workers, who still want to work, and can add value to a company. This trend is expected to keep growing, according to a 2003 AARP -Roper survey. The survey states that 55 percent of retirees would like to work part time for either income or enjoyment. Older workers can usually move through training programs faster, adding efficiency to management. 

Unique and New Niche businesses
New ideas and new niches are being created almost daily, by entrepreneurs. Filta Fry is a franchise that has specially equipped vans that go to restaurants on a scheduled basis to filter their cooking oils, which helps 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”. A new industry called “Sports Enhancement” is evolving, with High Intensity Training Centers leading the way. Started in 2000, “HIT” Centers offer workout programs for athletes of all ages, that wish to speed up their strength training for sporting activities.

Prospective franchise owners should be monitoring trends continually, looking for franchise opportunities that they can involve themselves with that will provide years of prosperity. “Hot” franchises tend to come and go, but trends are longer lasting. The trick is to get involved early enough to get the territory/location you want, that has the largest growth potential. “Equity” should be one of the most important words you remember during your investigation and decision process.  After all, if you are willing to work harder than you ever have before by owning your own business, shouldn’t you get something back at the end of your journey?

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Go to www.smallbusinessadvocate.com in the archives section for the complete "trends" interview with Joel Libava and Jim Blasingame. Jim is considered one of the world's top 25 small business experts. 

Joel Libava is an expert on franchising, and is the President of Franchise Selection Specialists Inc. located in Cleveland, Ohio, and a member of FranNet, an international franchise consulting group. Joel speaks at outplacement firms, Veteran’s groups, colleges, and franchise expositions, and is frequently quoted by the media. He can be reached at 216-831-2610, or you may e-mail him at franpro@sbcglobal.net]