Franchising has come a long way since Ray Kroc opened up his first McDonald’s back in 1955 in Illinois. According to the 2015 Franchise Business Economic Outlook report, franchising is set to continue growing this year and here’s our list of general trends and business categories that we predict will dominate the world of franchising in 2016.
Health and Fitness
The global health and fitness industry generates more than 75 billion US dollars in revenue each year. Within the industry itself, the business models with low startup costs and overhead that offer members 24-hour key card access and varied fitness routines have been most popular during the last five years, but some experts think that big-box concepts might make a comeback as the economy improves and people have more money to spend. According to a November 2013 report by IBISWorld market research firm, the $26 billion industry will continue to benefit from health-conscious baby boomers joining health clubs. Females in the under-35 demographic are also big spenders here.
Franchising in Home Care
Out of all the different franchise types, one franchise sector is growing at an incredible rate right now: it’s the senior care or home-healthcare niche. Demand is forecast to grow sharply, thanks to the ageing of the baby boomer generation. The number of people over age 60 will mushroom to 2 billion by 2050, according to UN estimates. To care for their parents, busy people will increasingly turn to home health care franchises.
The food-truck craze is pulling in big numbers. In a 2010 survey by Chicago-based food industry research and consulting firm Technomic, 26 percent of Americans said they had visited a food truck in the last six month period. Even established brick-and-mortar franchises such as are looking at food trucks to serve a hungry client base even faster – and they’re doing so with a diverse offering of food opportunities. Busy office workers are able to leave their desk, grab a bite, and get back to work in minutes rather than the traditional hour. Food trucks are a lower overhead way to serve more customers more food more quickly and they will be a significant part of the franchising industry.
Franchises connected with children’s educational play has been blossoming over the past few years and will continue to grow. Any business model related to enriching or expanding the world of kids is hip at the moment. Some of these businesses are about getting children reading, thinking, moving or simply believing in themselves. All of these businesses are about exposing kids to new experiences and providing them with a sense of achievement and community in a supportive environment. There are also franchises that fill a need for busy parents. Themes run the gamut from fitness and sports to music and art. STEM is the big word in the enrichment world right now. In the past few years, several fast-growing franchises have focused on making science, technology, engineering and maths accessible for kids.
The global pet business is worth an estimated $60 billion annually, so you can imagine that pet-related franchise businesses are buzzing. We have drastically altered how we think about our pets. They’re very much part of our families now and with that comes pampering and care, Christmas presents, birthday parties, outfits, shampoos and care goods, and general wellness products. Annual revenue growth in pet products and services is expected to climb by 4.4% through 2016 according to Franchise Help. Franchises in this area include: daycare, boarding, health insurance, wellness products, dog training and grooming.
With climate change becoming an ever more real and tangible issue, conserving natural resources, and limiting waste and energy use become imperative. Our leaning towards all things eco reflects a concern for the environment and our efforts to protect it, things like using all-natural products and ingredients, efficient and environmentally friendly production methods, limiting synthetics and toxins, and recycling. It’s also a category where Millennials (more about these later) are having a very big impact, and eco-friendly franchises encompass a wide-range of businesses, including eco-friendly business products, lighting solutions, pest control and cleaning and fresh food restaurants.
Food was really how franchising began (think, McDonald’s and Subway). But now we’re starting to see some changes in the kinds of foods we want and where we want to do that. People are increasingly seeking an experience, not just something to eat and when we do want to eat we’re opting for fresh, artisanal, healthier ingredients and options. Franchise businesses in this trend include frozen yogurt cafes, locally grown and sourced foods.
Millennials (or those aged 19 to 35) are having a major impact on society right now and the franchise world isn’t immune. They’re also a generation who are very interested in entrepreneurship. They launch 160,000 start-ups each month, according to the International Franchise Association (IFA). Because of this, the IFA has launched the NextGen Franchise initiative, a global competition to recognise and support the enormous contributions that young entrepreneurs have, and the impact of their contributions (this year with 450 applicants from 46 countries). It’s evident that millennials will strongly impact franchising.