We saw a lot of change in the franchise industry in 2019, and all indications are that this trend will continue through 2020. Recently, Score.org published an article highlighting four trends that have the potential to have a significant influence on franchisees – and the franchise industry as a whole – in the New Year.
4 Franchise Trends Poised to Shape the Industry in 2020
Trend #1: Demographic Shifts are Influencing the Market
According to Score.org, three major demographic shifts are each having their own unique impact on the franchise industry. First, the organization notes, consumer demand is now dominated by the Millennial generation. Second, Baby Boomers are buying franchises in record numbers by drawing from their long-term savings. Third, seniors are “aging out of the workforce,” and this is creating more alignment between franchise ownership and franchise patronage. Together, these three factors mean that sectors such as health and wellness may be poised to dominate the industry long-term.
Trend #2: Multi-Unit Franchise Ownership is Going Mainstream
“[M]ore than half of all franchise units in the U.S. are owned and run by multi-unit operators.” This has not always been the case, and Score.org attributes this shift to the growing desire among prospective franchisees to, “establish a small business empire.” While being a multi-unit owner isn’t for everyone (taking financial standing and various other considerations into account), as more prospective franchisees continue to express interest, franchisors may begin doing more to make multi-unit opportunities more accessible to all.
Trend #3: Homeowners are Outsourcing Like Never Before
Score.org reports that the residential services sector, “is hotter than ever.” This includes services such as cleaning, landscaping, handyman services and home repairs. According to Score.org, the reason for the recent growth in this sector is that, “[c]onsumers are turning to outsourced options for things they used to do on their own.” As Millennials get older and accumulate more disposable income, this too appears to be sector that is poised for continued expansion and profitability in 2020.
Trend #4: The Fitness Sector is Expanding into Overall Health and Wellness
The recent strength and stability of the fitness sector has spurred the development of new franchise systems seeking to attract consumers who have additional interest (and disposable income) in the health and wellness category. Along with “innovative workout concepts,” Score.org also anticipates that we will see more interest among customers and within franchising in the “spa, beauty and studio environment.”
What are our thoughts? For the most part, we agree with Score.org’s prognostications for 2020. Home services, health and wellness have indeed been busy sectors, and we are increasingly hearing from younger prospective franchisees who have interest in multi-unit franchise opportunities.
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Are you thinking about buying a franchise in 2020? If so, franchisee lawyer Jeffrey M. Goldstein can help you review the Franchise Disclosure Document (FDD), conduct your due diligence and negotiate the terms of your franchise agreement. To get started with a complimentary consultation, give us a call at 202-293-3947 or inquire online today.