IS SECTOR A BARRIER TO FRANCHISING? – Peter Thompson

In previous articles we have explored franchising as a growth strategy and whether or not your concept is indeed franchisable.

Plutus CG Peter Thompson

One of the most common questions posed to Franchise Consultants is “What is the most popular (and potentially most profitable) sector of the franchise industry”. The landscape has changed dramatically as franchising has proven successful in both traditional and emerging markets. The levels of initial investment have in the past proven to be a hurdle to all but the wealthiest of potential franchisees but the emergence of non “bricks and mortar” franchise opportunities has enabled the growth of business ownership to extend into home based locations and see those investment levels tumble.

Let’s take a look at the most popular franchise sectors outside of major Retail Stores and perhaps some others that on the surface would appear to be less than obvious.
FOOD SERVICE

When you think of franchising, this is the first business that springs to mind. You may think that this would only apply to “fast food” but the market offers many other diverse business models, such as:

  • Quick Service Restaurants (QSR) – hamburgers, pizza, fried chicken, wings etc. with differing amenities
  • Full Service Restaurants (FSR) – larger locations than QSR, more staff, more investment, specialised cuisines
  • Cafes & Bakeries – arguably the fastest growing concept in the food sector – the coffee shop
  • Retail – specific types of food eg frozen meats, ice cream, popcorn etc in a traditional retail environment.

AUTOMOTIVE

Another industry commonly associated with franchising and as with the food service sector the market offers different opportunities:

  • Services – oil and lube, mechanical repairs, windscreen replacements, detailing, gas stations
  • Products – either selling directly to consumers or with industry clients
  • Car Rental – including car sales

HOME & BUILDING SERVICES

One of the many growing segments of the franchise industry and more increasingly home based and therefore reduced investment levels:

  • Cleaning – either residential or commercial
  • Lawncare & Landscaping – seasonal, probably specialist vehicles required
  • Renovations – bathrooms, kitchens, decks, basements, home inspections etc
PERSONAL SERVICES

Huge growth in these services catering to health and beauty needs:

  • Health – gyms, fitness centres, nutrition, boot camps, diet centres
  • Beauty – hair, spa, nails, cosmetic retailers, tanning
  • Senior – diverse care & comfort, basic help, medical care

 

BUSINESS & PROFESSIONAL SERVICES
Attracting potential franchisees from the corporate world and utilising their existing skills. Tend to be home based with minimal investment and overheads:

  • B2B – consulting, coaching, training, print & copy centres, sign making, couriers etc
  • B2C – real estate, tax, accounting, direct marketing, newsletters

It’s a pretty impressive list, but it only scratches the surface and it simply reinforces the belief that, certainly in North America, almost every business with very few exceptions can be franchised.

Here are some further illustrations:

  • Children – all manner of products & services ranging from learning to diaper services to haircuts.
  • Computers/Internet Sales & Service – cartridges, troubleshooting, SEO consulting
  • Dry Cleaning
  • Education Products & Services – arguably one of the top 3 growth sectors of the franchise industry
  • Event Planning
  • Furniture & Upholstery Repairs
  • Gift Services
  • Pottery Painting
  • Pets Sales, Services & Supplies – a rapidly expanding multi billion dollar industry offering such diversity as nutrition, grooming, kennel services, training etc
  • Security Systems & Services
  • Sports/Recreation – especially those geared to the Golf Industry
  • Water Treatment
  • Wine Making

 

Even The Franchise Industry itself has franchise opportunities.

A few facts to leave you with:

  • Canadian franchises sell over $100 billion worth of products and services every year, making Canada the second largest franchise market in the world (after the USA)
  • There are over 1,000 franchise systems operating in Canada, representing almost 76,000 franchise system outlets
  • More than 4,300 new franchise outlets open in Canada each year – every two hours, every day
  • A record 1.5 million Canadians are employed by franchise operations
  • 92% of new franchises pass the critical first five years – a rate nearly four times higher than independent businesses
  • 86% of the franchisees opened in Canada within the last five years are still under the same ownership

 

Business Owners now understand that Franchising is a proven business development model and that it is well regulated but have always been skeptical as to whether their own business sector could be “franchisable”.

The development away from traditional models to that of a lower overhead, with minimal investment fees has seen the industry transformed and will continue to evolve in this way.

Most businesses these days have the potential to be franchised……..is yours one of them?

Want to discuss this further? Call Peter at 905 636 9378

 

Peter Thompson

Plutus Consulting Group

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