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2013 Franchising Predictions

There are mixed feelings about the current state of the U.S. economy. Some say the recession is far from over; others conclude that the economy is gaining momentum and on track for growth.

When it comes to the world of franchising, the attitude of Entrepreneur Magazine– an online news source that provides trends and business ideas for small business and franchise owners-is “cautious optimism.” They highlight the problem areas of U.S. franchisors and franchisees and list the players likely to succeed in 2013.

The oxymoron “cautious optimism” used by Entrepreneur is explained via two-fold reasoning.

The franchise industry is prospering despite the lag in the U.S. economy and there was respectable growth in franchise establishments in 2012. According to the IFA’s annual Franchise Business Economic Outlook report, as compiled by HIS Global Insight, 2012 saw an increase in franchise establishments by about 1.4 percent-the first since 2008. And, the growth is expected to continue at the same rate in 2013.

However, franchise owners remain frustrated at the low rate of growth and are skeptical of the endurance of the economic recovery and the actions in Washington as fiscal cliff issues are addressed.

Despite the downsides, Entrepreneur still expects some franchises to prosper. Specifically, areas that are expected to do well in the upcoming year include:

  • Real estate franchises: These franchises are likely to grow in the coming months due to the recovery of the U.S. housing market.
  • Commercial and residential service franchises: Piggybacking off real estate businesses, these franchises are also expected to grow as the economy picks up.
  • Fast-food restaurants: As individuals and families look for budget-friendly options, restaurants that offer meals on the go that are cheaper than traditional sit-down style dining venues are expected to do well.

Alternately, Entrepreneur lists franchises that are expected to see slower growth in the coming year. These include automotive and food retail franchises.

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