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Mid-Year Review in Franchising: Whats Hot…Whats Not

Author: Jim Coen
July 15, 2007
Category: Franchising in general

The year is half way through, a good time to look at what’s hot in franchising and what’s not. Not much scientific data to this post, just my observations and my opinion. Feel free to add your own What’s Hot and What’s Not comments.

What’s Hot in Franchising

Item #19 Disclosures: More and more franchise companies are making earnings claims disclosures in their UFOC! It’s about time! The updated FTC rules regarding the UFOC should encourage even more franchises to make an Item #19 financial disclosure.

American Association of Franchisees and Dealers: More and more franchisees are forming associations thru the AAFD.

Blue MauMau offers a forum for open discussion and has become one of the highest traffic locations for franchising information on the web.

Franchise Trade Shows: Some years ago, as the popularity of the internet began to rise, trade shows and expos declined in popularity and foot traffic. In more recent years, franchise show attendance has bounced back strongly. And while Franchise Shows no longer generate the foot traffic they once did, trade shows and expos provide many franchisors the ability to get up close and personal with a very specific prospect in a very specific geography. See: National Franchise & Business Opportunities Shows, MFV Expositions

Franchise Acquisitions: Service Brands, Service Master, Focus Brands, Kahala Corp, all continue to accumulate franchise brands, other companies are joining the trend.

Fresh Casual: healthy foods are here to stay, blame it on Subway’s success with Jared, Franchises serving up salads and smoothies enjoyed healthy growth last year healthy “Fresh Casual” eateries are coming on strong watch: Tossed, Robek’s, UFood, Fresh City, Salad Creations

New Franchise Opportunities: Frandata estimates that over 500 new franchises have been created in the last 6 months.

Business consulting/staffing: Every business needs elp, and that need is keeping business consulting and staffing franchises growing. In addition to nearly double the number of business consulting franchises, there is also a new emphasis on companies offering small-business and consulting services. Keep an eye on: Express Personnel, ActionCoach, Schooley Mitchell, Snelling

Senior-care services: As America ages, the senior-care industry is maturing beautifully. Growing 342 units in 2006, established franchises are flourishing and new ones are emerging. Keep an eye on: Comfort Keepers, Homewatch Caregivers

Personal-care services: Baby boomers may be young at heart, but their desire to look young as well has spurred the growth of franchises offering laser, skin-care, hair care, med-spa, massage, fitness and tanning services. Keep an eye on: Image Sun, Planet Beach, SportClips, GreatClips, Fantastic Sams, Massage Envy

Services for kids: There are many franchises that remain focused on children–and children’s education in particular. When it comes to learning programs for children, the segment increased by 850-plus units. Keep an eye on: Tutor Time, Huntington Learning Centers, Snip-Its, Fun Bus, Abrakadoodle

What’s Not Hot in Franchising

Video Franchises: at one time Blockbuster, West Coast Video, and Hollywood Video were franchise leaders, today they are barely holding on.

One Hour Photo Processing: Moto Photo was a franchise leader, technology has changed the business and it’s hard to imagine that the once thriving (one on every corner) industry will survive.

eBay drop-off stores: eBay the largest global marketplace has been creating opportunities for many, but franchises that list and sell items for eBay have a hard time making money. One of the early eBay drop-off franchises: iSoldit has suspended franchise sales. See: iSoldit Contemplates Liquidation. Meanwhile, eBay is still going strong.

These brands have some work to do before they can be considered “hot” again: Quiznos, Sona Med Spa, UPS, Coffee Beanery

Do-It-Yourself Meal Preparation Businesses: This sector may have been overbuilt, while the industry is relatively new the market at this point is not supporting the number of units built. See Meal Prep Fizzling

Gag Clauses. Some franchise agreements prohibit franchisees from discussing any aspect of their franchise experience with anyone outside the system. Quiznos was unsuccessful in its attempt to terminate the board members of the franchisee group Toasted Subs for violating this provision.