In the 1980s, frozen yogurt was a hot concept. Five years ago, do-it-yourself meal preparation franchises swept like wildfire throughout the nation. And just a few years ago, “green” and “organic” became major buzzwords — and frozen yogurt once again reclaimed the spotlight. The trends in franchising are constantly changing. This keeps things dynamic for consumers, but, for interested investors, makes choosing the right opportunity slightly daunting. So exactly how does one go about determining what trends are hot — and what that means to the world of franchising? We asked franchising experts for some tricks and tips.
What’s The Buzz?
The fastest and easiest way to know what trends are hot is to simply stop and listen. Read headlines, visit social networking sites, turn on the news, take notice of what celebrities are wearing or eating. These top trends will most likely trickle down and somehow be reflected in the franchising world. “Hot trends have lots of ‘buzz’ about them,” says Jeff Elgin, CEO of FranChoice Inc., a network of franchise referral consultants.
However, this doesn’t mean that you should limit your franchise research simply to concepts based on the current talk of the town. “In my observation, many people want to be part of the latest and greatest trend, regardless of whether they have to suspend their common sense in order to go forward with it,” says Elgin. “The secret to long-term success is to somehow determine whether the hot trend is here to stay or just a fad and then act accordingly.”
Image Isn’t Everything . . . But It’s a Big Thing
When it comes to franchise concepts, what’s hot can simply boil down to the image that a franchise has been able to create. And when you’re buying a franchise, image is a big part of what you’re buying. For example, Five Guys Burgers and Fries isn’t offering anything new with their hamburgers, but they have managed to dish out a great deal of appeal and create an image that draws both consumers and investors to their locations. Pinkberry started out in a residential, low-exposure location, but attracted so many customers and so much media attention that their business soon boomed.
Though intangible, a franchise company’s image and resulting publicity can be huge factor in the franchise’s success. So take the time to examine the franchisor’s marketing strategy and take note of what people are saying about the company. Buzz is not always an indication of long-lasting success, but it certainly helps identify some potentially hot opportunities.
Watch for National Movements
Trends don’t always have a nationwide impact. What’s hot on the West Coast, for example, may never reach the Midwest. However, some factors are capable of creating a tidal wave of change that greatly impacts existing industries and even creates new ones. Three such factors to keep an eye on when tracking trends are the economy, demographics and issues of national concern.
The economy always affects consumer behavior. For example, as the country tries to recover from the recession, consumers remain much more cautious in their spending. As a result, new kinds of products and services are in demand. The current trend, says Elgin, is avoiding unnecessary luxury — “services like home cleaning are struggling in some cases” — and focusing on inexpensive, escapist products that offer low-cost fun.
Major shifts in demographics create ripple effects in what industries are booming. A current example of a demographic trend is the growing population of seniors in the United States. According to the U.S. Census Bureau, roughly 36 million Americans were aged 65 and over in 2004; this number is expected to grow to 86 million by 2050. “The aging of the baby boom generation is driving demand for more services in senior services,” says Alisa Harrison, Vice President of Communications and Marketing at the International Franchise Association. Paying attention to demographic changes will point you in the direction of new needs and opportunities that franchises can fill.
Finally, any issue that affects the nation as a whole tends to create trends. Right now, one issue concerning the nation is obesity. This national health crisis has fueled certain segments of the franchising industry, such as health and wellness concepts and fitness facilities, says Harrison.
Beyond the Trends
Once you have identified trends and corresponding franchise opportunities, your job is not over. Simply choosing a “hot” concept and a buzzworthy franchise doesn’t guarantee franchise success. You must also investigate the strength of the franchise system and whether there’s a market for the concept in your area. “Senior health care, for example, is very ‘hot’ right now nationally, but the key is identifying a top-quality franchise with a reputation for training and supporting franchisees and then making certain that there is an opportunity for the individual product or service in a specific market,” says Jeff Johnson, founder and CEO of the Franchise Research Institute, a market research and consulting firm.
As for the economy, even when it’s sour, that doesn’t mean that all franchise companies are hurting. “Investors should look for the brands that dominate their respective categories or leaders within the region [where] they operate despite the economy,” advises Lorne Fisher, CEO of Fish Consulting, a national PR and marketing agency that specializes in franchises. “Strong brands with focused marketing programs will continue to grow no matter where the economy is heading.”
And, finally, even if demographics are on your side, you need to do some fine-tuning. “You must understand your demographics before you can understand where best to establish your franchise locations,” says Johnson. “The question becomes, do the really successful franchisee locations have a demographic profile similar to my target market? If they do, then how does the competitive situation in my market compare to that of other franchisee locations? And even if the demographic profile is excellent, is my market saturated with this type of product or service offering?”
Many factors go into determining whether a franchising opportunity is not just hot, but right for you. Do your due diligence and take the time to look at the whole picture in order to accurately weigh the opportunity. This ensures you aren’t getting caught up in the hype of a hot trend, but that you’ve actually found a franchise that truly combines both the sizzle and the steak.
Sara Wilson is a freelance writer who specializes in issues related to small businesses. Contact her at email@example.com