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A Look at High-Performing Franchises
Food's Grip Loosens as Diverse Concepts Pop Up and Do Well The Wall Street Journal --February 12, 2008 It looks like franchising is no longer dominated by a single sector. The fast-food industry's power-grip on the franchising industry is slowly loosening, as industries serving the consumer and residential markets are expanding rapidly and performing well financially, according to The Wall Street Journal list of 25 franchise high performers. The big performers are a diverse bunch - including a dance studio, senior-care facility, a veterinary hospital and a moving company. In fact, there are now more than 230 lines of businesses that do franchising, according to FRANdata, an Arlington, Va., independent research firm that helped analyze franchise data from the past three years to compile the list. And the hottest growth, by both unit market share and by fastest growing industries as measured by new units, is taking place in the services industry, such as health and fitness, security and consumer services. Slower Pace Ahead? In 2006, nearly 3,000 established franchise brands expanded their total units by an average of 4%. And more than 300 companies began franchising for the first time, according to the International Franchise Association in Washington and FRANdata. But with many predicting an economic slowdown and banks tightening their lending criteria, the number of both new franchise units and new concepts should start to ebb. "The pace of growth is going to slow," says Darrell Johnson, president of FRANdata, because banks are getting risk averse. Consumer-focused businesses - such as restaurants, lawn-care and handyman services and computer support - could see some downturn this year if customers start tightening their own wallets in response to cooling economic conditions. In particular, fast-food and casual-dining businesses, while still showing strength, with eight names on the list, also are facing pressure from wage and food cost increases. To lower operating costs, several food franchises are already shuttering some locations. "The food marketpace is getting crowded," says Marc Kiekenapp, managing partner of franchise broker KRA Franchising LLC in Scotsdale, Ariz. "There are so many choices in franchising today that people will start in the food area but then drift toward a lot of the other opportunities and segments in franchising." Money Makers 25 franchise high performers, listed alphabetically
Source: FRANdata WSJ.com/SmallBusiness takes a look at franchising in its 2008 Franchise High Performers list. Working with independent research firm FRANdata, WSJ.com identified 25 brands that are well established, exhibit overall financial health and have a proven record of franchise success. Go online to find out how we determined who made the cut and see a rundown of each franchise on the list. Plus, test your knowledge of franchising and learn about financing a franchise purchase during the credit crunch. By Raymond Flandez |
