Thursday, August 28, 2008

Black Enterprise Magazine's 25 Most Affordable Franchises

Recession-Resistant Industries And Low Startup Costs Make These Opportunities Our Top Pick
“The franchising sector is as prolific as ever. The total number of franchised business locations in the U.S. now exceeds 900,000, creating some 21 million jobs and $2.3 trillion in total economic output, according to the IFA, which also states that franchising accounts for about 11.5% of the entire U.S. economy. And the current economic environment has made this business sector a viable option for aspiring entrepreneurs. ‘When traditional investments either equity markets like the stock market or investments like real estate don’t perform as well as they did in the past, people start to look at other places to put their money,' says Matthew Shay, IFAh president. ‘That makes franchising a more attractive alternative as well.’ Rising unemployment also contributes to the sector's growth, as laid-off workers create their own jobs through entrepreneurship. ‘People who have been downsized, right-sized, outsized voluntarily or involuntarily have in many cases turned to franchising as a way of securing their economic future,’ says Shay. But the world of franchising is large. Where are the hot spots? According to Darrell Johnson, president of FRANdata, which provides information and analysis for the U.S. franchise industry, a few areas enjoy solid growth and some appear recession-resistant as well: Pet services, including grooming and dog walking; child-focused enterprises, such as juvenile fitness programs; educational tutoring or test prep, and daycare services; business services such as commercial cleaning and lawn care; personal services such as fitness centers, health programs, and beauty salons; business-to-business, including franchises specializing in outsourcing virtual assistants, law and tax services, and tech consulting; and residential lawn care, landscaping, and housecleaning, among others. Much of the growth in these areas is a result of busy baby boomers and Generation Xers, groups looking to enjoy what free time they have while living longer, healthier, more affluent lives. And many of them are working parents who must find caregivers for their children. ‘There is a lot more growth in service areas, professional services, personal services, residential services; things that make life easier for people in general,’ says Johnson. ‘There is no reason to think that the service sector is going to slow down, whether the economy is going up or down, because most people want to use their time more efficiently. Fitness and personal care are big parts of the franchise world that perform well in just about any economic climate. Fitness is big business. The number of health clubs has increased more than 250% over the last 10 years, according to the International Health, Racquet and Sportsclub Association. According to IHRSA, memberships have declined but, despite the economy, club revenues have actually gone up. "There is no sure way to see how membership will be affected in 2008, but having a health club membership is not a luxury, it's an investment in your health,' says Kara Thompson, an IHRSA representative.”

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