No matter how long you have been a franchise operator or have been following the industry, franchising continues to change. The lists of the most profitable franchises, the fastest-growing and the trendiest are different every year. Additionally, the common wisdom regarding how to choose a franchise and how to successfully operate one continues to update and change as well. Staying on top of all of these developments can be difficult, but in the end it’s worth it. One thing that hasn’t changed — opening a franchise can be a tremendously profitable business decision.
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In the past, franchisors typically preferred franchisees that did not have other types of franchises already. They wanted new operators who they could mold in their own image, and they wanted people who would focus exclusively on their franchise and brand. This has largely changed in the last decade or so. Franchises want new franchisees that have experience operating a franchise, even if it’s a competing franchise or something completely unrelated. The experience and business skills gained from operating another franchise are highly sought after for new franchisees.
The Food and Drug Administration will require restaurants with 20 or more locations to provide nutritional information starting in November 2015. All establishments that qualify will have to provide accurate and detailed nutritional information, and it will have to be prominently displayed on menus and displays. It’s still hard to say how this will affect consumer choices. Will customers who have been eating french fries for years suddenly start getting salads? The new rule’s effect on restaurants will largely depend on the healthfulness of individual items and the type of customer base they have.
Is Crowdfunding the Next Frontier?
One of the oldest and most common challenges facing franchisors and franchisees is in raising enough funding to start up or expand the business. In recent years, crowdfunding has started to get interested in the franchise space, and many franchises are now benefitting from the funding they are receiving from part-time entrepreneurs on the Internet. Many of the biggest crowdfunding sites have already started working with franchises including: TopLine, LiftForward, ApplePie Capital, and DealStruck. Using crowdfunding could help franchisees and franchisors grow much more rapidly than was possible in the past, but what are the new risks from tapping into this funding?
Targeting the Next Generation
As we move into a new cohort of consumers, it always shakes up the market in unexpected ways. The top franchises of today are very different from those from 20 years ago, and the top franchises in 10 years will depend on how consumer tastes change and stay the same. Recent examples include the frozen yogurt fad and the sharp rise in fitness centers and gyms.
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At the same time, franchisors are doing their best to update their images and their marketing, so that they can attract the young entrepreneurs that can help them grow their businesses. Operator experience will be crucial for franchise growth in the future, but so will an understanding of new trends and modern technologies.