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2019 Franchising Trends: The State of Franchising

By: Bill Bradley

 

The State of Franchising

The franchise space is experiencing rapid expansion. Consumer trends are shifting while technological advances are pushing franchisor boundaries—so much so, your friendly experts at America’s Best Franchises say it’s safe to expect continued growth in the franchising industry over the next few years.

In the meantime, let’s take a look at the state of franchising and why it’s such an exciting time for the industry.

The Economy Is on the Upswing

While increased wages are beginning to affect franchise business owners’ bottom line, the consequence just might be worth the reward. As the unemployment rate continues to decrease and more jobs are becoming available, consumers are becoming more confident. And more spending means more money in the franchisee and franchisor’s pockets.

Subsequently, consumers are paying off more of their debt. With less capital tied up in loans, banks will have more money to lend. Therefore, aspiring and experienced business owners will find it easier to secure funding to start or grow their business(es).

The Internet Is Changing Business Practices

The internet and rise of e-commerce present several opportunities and challenges in the franchising space. It gives the franchisor much more visibility and increases brand recognition at a speed that was once nearly impossible. It also allows franchisors to build and protect their market share by offering another way to acquire new customers and stay engaged with existing ones.

On the other hand, most franchisors prefer to maintain central control of the company website and don’t often allow franchisees to create their own sites. Unfortunately, this gives franchisors the power to sell their goods and services in their franchisees’ territories. Franchise executives say online sales help significantly increase brand recognition, while franchisees argue doing so cannibalizes the business.

So, while the internet has helped grow franchised businesses, it’s also causing a rift between franchisors and their franchisees. Either way, we’re excited to see how the internet will continue to evolve franchising as we know it.

Multi-Unit Franchising Is on the Rise

The franchise industry is seeing rapid growth in multi-unit franchising as well, and it’s a trend that won’t be going anywhere any time soon. For the first time, multi-unit franchise owners outnumber single-unit franchisees. As opposed to relying on the success of one location, multi-unit operators earn revenue from multiple franchised units.

Why? That’s because multi-unit operators are more experienced business owners who concentrate on scaling their network of locations. Multi-unit franchising provides an opportunity for tremendous growth and wealth creation for all parties involved—the brand, franchisor and franchisee. 

Mergers & Acquisitions Are Becoming More Common

As the economy strengthens, we can also expect to see more and more franchisors purchasing smaller, undercapitalized franchises with poor brand recognition. Franchisors are merging with or acquiring smaller companies in a lateral or related industry. This gives them access to a new customer base, increasing their market share. It also diversifies their products and services, as well as reduces competition.

All in all, we’d say it’s a good time to be in franchising. The industry is booming and will continue progress in an upward direction. And we’re excited to be along for the ride.

If you’re considering franchising, there’s no better place to start than right here.

Published: June 6, 2019
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Source: America's Best Franchises

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Bill Bradley

Bill Bradley

Bill Bradley is founding member and CEO of America’s Best Franchises, LLC.  Bill founded three financial services firms, Ocean Shores Ventures, Denali International and William Bradley Enterprises. In addition, to launching America’s Best Franchises in 2005, Bill orchestrated approximately 20 private equity transactions in excess of $31 million, and launched five specific purpose private equity partnerships.

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