What the Year Holds for Franchising
by Mark Henricks
When it comes to uncertainty, 2012 can hold its own with
most years, but the ambiguity of political change and
economic trends isn’t slowing down franchising. “I think
2012 will be overall better than 2011 for franchising,” says
Lane Fisher, a Philadelphia franchise attorney and director
of the International Franchise Association.
Fisher’s optimism is largely based on expected growth in
multi-unit and multi-concept franchises, as well as
expansion of existing franchises into new territories. “It’ll be
fueled by growth in certain service industries -- business-to-business, senior care, exercise, niche restaurants,”
Fisher expects low-investment franchises, home-based
businesses, mobile concepts and retailers, and others that
require small real-estate footprints to do especially well in
all industries. He expects international expansion to be a
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strong theme as franchisers look to countries where they
have little or no geographical presence, and where credit
availability is better than in the United States.
The most important indicator of which concepts will expand
in the coming year, Fisher believes, is strong unit economics.
He bases his forecast on an analysis of the brands that
were able to expand during the last recession. “That was
by far the most important thing,” Fisher says.
Other themes that Fisher expects in 2012 include more
outsourcing of functions such as credit and collections, and
marketing, and continuing growth in the numbers of military
veterans, minorities, and women in the ranks of franchisees.
But the main one will be more franchises opened by people
who already own franchises. “More than 50 percent of
growth of most brands comes from existing franchisees,
especially as the system matures,” Fisher notes.