The Business Journal December 21, 2018 – 12:00 PM
Written By Frank Lopez
With a strong and healthy North American economy this year, and a strong economic outlook for the upcoming year, 2019 is poised to be a good year for the franchise industry.
Kiplinger is projecting total holiday receipts to be up 4.8 percent and the GDP to swell by 3.5 percent in the third quarter. Combined with low unemployment rates, the franchise industry is expected to continue strong into 2019.
As usual, some of the most popular franchise categories are food, coffee, automotive and restaurants.
A big catalyst for many trends of 2018 was advancing technology in this digital age. Micro-influencers— online personalities with massive followings on social media, third-party autonomous delivery such as Uber Eats, and electronic ordering through virtual assistants and Artificial Intelligence such as Amazon’s Alexa and Google Home and AI kiosks have been integrated into franchise brands to bring a better experience to shoppers.
Serve us service
In the service industry, there is a trend of franchisees keeping their main jobs as well as running a franchise in what is called in business a “semi-passive” model. A franchise owner will work 5 to 10 hours a week managing their manager, and continue to focus on their main job.
“The trends were seeing right now would be things where people can keep their jobs and run a business on the side,” said Katie Fagan, president of franchise consulting firm FranNet. “It allows people to keep their job and then move on into the business as it starts cash flowing so they can mitigate their risk. They’ll keep their job, keep the business going on the side, and once it brings enough cash flow to replace their income, they can move away from corporate America, or stick to it.”
Fagan said that service-based jobs that people and businesses need to get done and that can’t be done online typically stay trending year after year.
Consumers also like to have a shopping experience that can’t be replicated online, such as actually walking into a brick and mortar store with and temporary pop-up shops with their families.
In the health and wellness industry, more people are choosing to get memberships at a number of different boutique fitness gyms over big-box gyms, and there is an uptick in more healthy fast casual restaurants such as acai bowl restaurants and eateries with more plant-based menus. Those trends should continue into 2019.
For the local sandwich franchise Deli Delicious, 2018 has shifted its focus to variety, delivery and convenience, as well as focusing on creating a more health and environmentally conscious culture for the company.
Along with serving more plant-based proteins, less sugary foods in the kid’s meals, Ali Nekumanesh, Deli Delicious’ executive vice president, said Mediterranean diets are also at the top of mind for people who make the menu.
“We will use less and less plastics, foam, have more self-serve kiosks, calorie counts on prints and menus,” said Nekumanesh, “We continue to monitor the trends in the market place to try and stay ‘current’ with any new trends.”
With an ever-growing senior population, Fagan said that there is a lot growth in the senior care sector, whether it is comfort care or at-home care, and that there is a growing demand for that type of service.
With the minimum wage higher in California than in many other states — it will hit $11 per hour for employers of 26 or more, on its way to $15 by 2022, franchises follow the wages and the demographics and look to hire college students with flexible schedules, especially in the food industry. While labor costs are always a concern for franchisers in California, they have figured out how to make it work.
Clients of Fagan have reported to her that whether they are fans of President Trump’s policies or not, like many in the business sector, they are fans of the benefits they are getting from the new tax plan.
Franchise trends that might bleed into 2019 will likely stem from what was popular in 2018, but there are always new trends a franchisor and franchisee should look out for.
Owning multiple units and multiple concepts is already an established trend, but more franchisees are opening other non-competing offerings to diversify earnings, implementing smaller and more-effective franchise models such as kiosks, mobile vendor trucks and going into community markets.
While the saying, “do what you know, could be a helpful guiding attitude, Fagan said it’s not a hard rule, especially in the franchise industry.
“A lot of people think that they have to go a franchise or industry that they have expertise in, and a lot of times its not a fit for people. What we want to do when buying a franchise is ask, ‘what does the daily life look like for an owner, and am I comfortable doing that’. We [franchisees] are looking to get into something where we can be successful and use our background from corporate America.”