Starting a Franchise? Six Industries Set to Boom: Report

For entrepreneurs venturing into the small business territory, launching a franchise can offer security through national brand recognition, economies of scale and access to proven formulas for success. A new report lists six franchise industries with promising outlooks.

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According to the International Franchise Association, the number of franchise establishments is projected to rise 1.9 percent this year as the business world takes notice of the potential perks under the umbrella of a well-known company.

“Overall, franchises are expected to continue stealing market share away from independent businesses and increasing their total economic output, which currently stands at 4.4 percent of the total private sector,” said IBISWorld industry analyst Eben Jose.

But which franchises offer the best opportunities for aspiring small business owners?

The industry research firm IBISWorld released its list of six franchise industries with promising outlooks during the next five years, based on revenue growth, growth in the number of franchise establishments and those establishments’ dispersion across the U.S.

In-Home Senior Care: The firm forecasts 6.3-percent growth in the in-home senior care industry due to millions of Baby Boomers who are fueling the $6 billion industry. IBISWorld expects the “aging-in-place” trend to strength as the industry rapidly expands during the next five years.

New Car Dealers: The new car dealers industry is forecast to increase at an average annual rate of 3.4 percent as sales turn the corner on previous negative growth. During the past five

years, the industry suffered a nearly 5 percent annual decrease as consumers cut back on spending and postponed new car purchases, but it is now poised for a comeback, IBISWorld said.

Pharmacies and Drug Stores: Expected to increase more than 3 percent annually, pharmacies and drug store franchises will experience a boom from the widespread adoption of generic drugs. Despite heavy government regulation, these franchises performed well during the recession and are expected to return to pre-recession growth rates in 2012.

Sandwich and Sub Stores: In the past five years, food truck and buying local have caught the public’s attention and taken off, putting more pressure on sandwich and sub store franchises to adapt. Still, these businesses are expected to expand 3 percent annually, despite stiff competition, and continue to drive many independent businesses out of business.

Gas Stations with Convenience Stores: The price at the pump may cause many Americans to balk, but gas station franchises have the potential for strong growth. Both Shell and Exxon Mobil , two of the largest gasoline distributors in the world, still use the franchise model and although many companies are starting to buy franchisees out, entering the industry is still doable. The $331.7 billion industry is expected to grow more than 2 percent per year depending on consumer spending and total vehicle miles driven.

Supermarkets and Grocery Stores: Despite stiff competition from big-box retailers, convenience stores and warehouses, this $494.6 billion industry is expected to show steady growth of 0.1 percent per year as the economy improves and consumers begin to indulge again.

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