Franchising Trends for 2013

In 2013, new shifts in consumer orientation and new market trends will affect the franchising industry. Changes in consumer behavior, increased concentration by sectors (such as the healthy fast food one) along with the progressive distribution of smartphone technologies, mark the new niches for franchising locally and internationally. One of the main changes for this year is consumers’ increasing reliance on tablet and smartphone devices in the choice of their shopping destination. According to a recent study, 46 percent of American consumers look up prices on a store’s mobile site before shopping there. These changing realities reflect some of the new Franchising trends for 2013:

1. Business consulting/ services/ training

One of the top growth industries which registered an increase on an annual base of more than 180%. Some of the top franchises in this sector for 2012 were ActionCOACH and tabboards.com.

2. Hair and nails

Requiring relatively low initial investment, franchises in this sector ranked #2 in growth over last year and will continue to grow in 2013. Some of the success factors are the freedom from dealing with stock.

3. Healthy fast food & Frozen yogurt concept:

The reemerging fast-food sector is bringing a new wave of low-calorie, fresh, healthy and homestyle restaurants. One of the newest concepts that will continue to attract new franchisees will be the frozen yogurt concept where Pinkberry is one of the highest growing franchisors.

4. Space availability and going local

Some of the rapid growth in franchises is related to the combination of good location, competitive pricing and a fast product turnover. While most big retailers focus on competitive pricing, new franchisors centered in going local can gain a substantial advantage over the next few years. Brands that halted commercial expansion during the crisis are likely to renew their real estate business developments through new partnerships over this year.

5. Mobile apps and tablets

An increasing number of consumers is getting into app navigation and research of their shopping destinations. They specialize into finding the best deals even before going to the store. Development of a fully accessible mobile web site along with an app is necessary for almost every successful franchise. The predictions for growth in this sector approach 80% over the next five years.

6. Refranchising

Refranchising reflects more of what franchisors actually like doing in response to transformative market environments. In 2013, refranchising will continue to be an important factor to consider as franchisors continue to develop innovative new products in increasingly competitive business environments.

7. Interest rates

Depending on location and credit history, these vary. Overall, in most of the developed markets in Europe, Asia and the Americas a good credit history of the franchisee will get a 3 to 5.5% interest rate which is relatively cheap. Some larger franchisors can also offer financing for multiunit entities while a good credit history will still be necessary.

In 2012 we saw the first actual increase in franchise establishments since 2008, and this trend is expected to remain in 2013 and even to outpace the rest of the business sector.