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The Hottest Franchises

Posted By Joel Libava On August 21, 2012 @ 2:00 pm In Franchise | 7 Comments

The other day, a reporter for a Hispanic business magazine asked me what I thought the hottest franchises were this year. I hesitated, like I always do when I get asked that question, and shared a couple of “categories” that are currently popular.

burger king

When he pressed me for the names of specific franchises, I hesitated again, but this time, I spouted off 2-3 concepts that have been getting a lot of PR, or have been selling a lot of new franchises lately. But, I really don’t like naming names. I’m much more comfortable naming some of the trends in franchising [1].

A “hot” franchise opportunity can mean a number of different things. It depends on who you are and where you are in the franchise buying process. Take a look at the three things I listed below that could make a franchise concept “hot,” and maybe you’ll understand where I’m going with this important topic:

High New Unit Sales

In my industry, things are measured in units. Franchisors are always on the hunt for new franchisees. New franchisees open new units. New units create new franchise fees, and a new stream of monthly royalty income.

Check out this Introduction to Franchising [2] to learn about these fees, which are the lifeblood of the franchise model. If a franchisor is selling a lot of new franchise units, it could be considered to be a “hot” franchise concept.

Locations Everywhere

Let’s say that you travel a lot for business [3]. Let’s also say that you’ve been thinking of leaving your job and becoming the owner of your own business, maybe even a franchise. Since you’re in the “looking for an opportunity” mode, you’ve been keeping your eye on certain businesses that populate all the places you travel to. And, there’s this one restaurant franchise that you keeps popping up everywhere you go. Not only are these franchises everywhere, they all seem to be new. In your eyes, this franchise seems like a “hot” one.

Publicity

Some franchises get a lot of publicity; the reasons why, vary.  For example, Dunkin’ Donuts tends to get a lot of PR. Like this story featuring two very-well known sports figures that just purchased the rights to 50 Dunkin’ Donuts franchises [4].

Earnings announcements can be turned into PR, too. Here’s a story that discusses Burger King’s 2Q profit going up 60% [5]. (The reasons include their new menu, and recent marketing initiatives.)  Then there’s the recent publicity surrounding a certain chicken-sandwich franchise [6], that may or may not be considered what’s termed, “good” publicity.

So, based on the publicity that those three franchises have been getting as of late, one could say that they are pretty “hot” franchises.  The reason I chose to attempt to define what a hot franchise is by using the examples above, was to get you to stop and think for a minute.

Now, I understand why you want to find out what the hottest franchises are these days. You’re equating popularity with higher income opportunities. That’s completely normal. But, it’s not necessarily the case, every time.

Look at the recent Facebook IPO [7], for a moment. Didn’t you want to secretly “get in on the ground floor,” so that you’d have a chance to make a lot of money on a brand new stock? And, wasn’t the fact that Facebook has been considered a “hot” social media site-a hot company the main reason for your interest in it?

Investigating a franchise because its “hot,” and using whatever criteria you’re using to make it so, can be really tricky. Will the franchise concept you’re interested in potentially be a short-lived fad? Are there too many locations nearby for you to really have a chance to make money? Can the franchisor keep up with all the new units being opened?

Those are all great questions that you need to ask yourself before you sign on the dotted line. Of course, one of the best things about franchising is that you get to ask actual franchisees, the ones that took a risk already and that are in business, all the questions you want.

But, in your excitement to become an owner, to finally be in control of your career, don’t forget to ask yourself this question:

“Is the franchise I’m thinking of purchasing right for me?”

If so, maybe it can become a “hot” franchise for you and your family.

Make sense?

Burger King [8] Photo via Shutterstock


Article printed from Small Business Trends: http://smallbiztrends.com

URL to article: http://smallbiztrends.com/2012/08/the-hottest-franchises.html

URLs in this post:

[1] trends in franchising: http://smallbiztrends.com/2011/12/franchise-trends-for-2012.html

[2] this Introduction to Franchising: http://smallbiztrends.com/2011/12/introduction-to-franchising.html

[3] travel a lot for business: http://smallbiztrends.com/2011/12/travel-tips-and-small-business-suggestions.html

[4] two very-well known sports figures that just purchased the rights to 50 Dunkin’ Donuts franchises: http://www.franchisetimes.com/content/story.php?article=02408

[5] Burger King’s 2Q profit going up 60%: http://nrn.com/article/burger-king-2q-profit-60-sales-rise-new-menu-items

[6] a certain chicken-sandwich franchise: http://smallbiztrends.com/2012/07/chick-fil-a-comments-put-brand-in-jeopardy.html

[7] Facebook IPO: http://www.forbes.com/sites/tjmccue/2012/05/21/facebook-ipo-flop-or-not-did-you-close-your-facebook-account/

[8] Burger King: http://www.shutterstock.com/pic-17472787/stock-photo-august-lundy-s-lane-niagara-falls-canada-everything-is-big-large-and-overdone-in-this.html