INVESTING IN THE RIGHT FRANCHISE
Investing in the right business opportunity involves analyzing key consumer demand trends. Rather than focusing on current or short term trends, the demand for products or services during the course of the next 10 – 15 years is more important. When looking at franchises it is important to:
• Determine what types of franchises interest you and match your skill sets.
• Calculate the amount of capital required and decide how to fund the business.
• Forecast which products and services will still be in demand when you are ready to sell the business
• Find promising franchise opportunities that meet these standards.
• Evaluate and validate the franchises selected.
Each of these steps requires reviewing the right information. A key aspect is seeing what the future may hold for a particular category of franchises and individual franchises. Some franchises are expensive cash cows in mature or declining industries. Others are faddish stars that will fade away. The best are proven models in growing industries that will still be attractive to buyers 10 – 15 years from now.
Let’s examine some mid-term demographic trends covering 2010 to 2015:
U.S. Census Bureau Population Projections
• The number of people in the U.S. over 65 years of age will grow from 40 million to 47 million. (It will reach 80 million by 2030)
• The percent of the population 65 and older will go from 13% to 14.4%
• By 2015 over 1 in 7 people in the U.S. will be 65 or older.
• The number of Hispanics in the U.S. will grow from 50 million to 58 million
• The percent of Hispanics in the population will go from 16% to 17.7%
• By 2015 approximately 1 in 5.6 people in the U.S. will be Hispanic.
• By 2015 almost 1 in 20 people in the U.S. will be Asian
The franchise categories that should benefit from these population trends and resulting demand for products and services are:
• Health and Fitness Franchises that include home healthcare, fitness and recreational sports centers, medical services and other services for the elderly.
• Personal Care Services including beauty products and services, massage therapy and related services.
• Facilities support services such as office administrative services, janitorial services, IT services, temporary employment agencies.
• Home Service Franchises such as lawn care and landscaping, cleaning services, pest control, handyman, home care services focused on the elderly and security services.
• Accounting, tax preparation, bookkeeping and payroll services
• Food Franchises such as Mexican and Asian restaurants and healthy cuisine concepts. Food delivery concepts.
• Children’s Services that provide tutorial, supplemental educational services and programs for learning disabled children. Educational and recreational services reduced or eliminated as a result of funding reductions.
Demographic trends will alter the marketplace and the demand for particular goods and services. Franchising will respond to and mirror these changes. Individuals looking to purchase a franchise determine if a particular franchise reflects a fad or has a sustainable market to sell to.
Jack Kuykendall is a consultant at www.FranchiseGuidepost.com He can be reached at: Office 909 980 0698 or JackKuykendall@msn.com