heat OF THE MOMENT

Entrepreneur, Jan, 2000 by Michelle Prather

OUR IN-DEPTH LOOK AT THE CURRENT STATE OF FRANCHISING

WHETHER IT'S DUE TO THE UNATTRACTIVENESS OF PREPARING CHICKEN KIEV AFTER A 14-HOUR WORKDAY OR THE INCREASING IMPOSSIBILITY OF SQUEEZING A SOCIAL LIFE INTO A MEASLY 24 HOURS. CONSUMERS ARE SCREAMING FOR RELIEF. FRANCHISES WHOSE BUSINESS IT IS TO LIGHTEN CONSUMERS' LIFE LOAD--FINANCIALLY OR TIME-WISE--ARE THE ONES POISED FOR DRAMATIC GROWTH IN 2000 AND BEYOND. HENCE, MCDONALD'S POSITION AT THE APEX OF OUR FRANCHISE 500(R) THIS YEAR.

THE GOLDEN ARCHES' VICTORY IS NOT SO SURPRISING, CONSIDERING CONSUMERS SPENT ABOUT $970 MILLION DAILY ON FOOD PREPARED AWAY FROM HOME IN 1999, ACCORDING TO THE NATIONAL RESTAURANT ASSOCIATION. IT SEEMS NIKE'S "JUST DO IT" HAS BEEN REPLACED WITH "JUST DO IT FOR ME." NEW TRENDS IN FRANCHISING REVEAL HOW YOU CAN ANSWER THIS CRY OF A NEW ERA.

LET'S GET PHYSICAL

Let's face it: Those Bally's commercials (even the one with the "older" woman who resembles actress Linda Hamilton in Terminator 2) don't make the average American woman want to run for the spinning room, swarming with sweaty male and female twentysomethings wearing spandex. The huge growth Jazzercise Inc., Curves for Women and Lady of America all experienced in 1999 proves the demand is very high for women-only fitness center franchises that are as comfortable and supportive as they can possibly be.

The National Sporting Goods Association estimated that 53.4 percent of all the people who hit the fitness clubs in 1998 were women. If given the option to break a sweat in a welcoming environment vs. a mecca of 90210 lookalikes, where do you think they'd rather go?

INVESTING IN THE FUTURE

Any number of elements could explain why franchised centers that either tutor children in basic subjects or offer attention-grabbing activities in subjects like science and art are quickly multiplying. Columbine-induced fear has highlighted the need to get children every bit of extra attention--or else. And the bar for college-worthy SAT scores is getting higher. According to Jerry Wilkerson, president of Chicago-based franchise executive management search firm Franchise Recruiters Ltd., "We're not going to be able to build enough of these facilities in the next three to five years to handle the market. When [children's educational] franchises open, they're completely subscribed. People go on a waiting list as soon as they hear a place is being built." To satisfy demand, expect to see more centers opening in storefront locations, offering special-emphasis learning, such as computer training.

And since the trend dictates that learning prevails over play, the Sylvan and Huntington Learning Centers of the world are attractive franchise options for educators who need a break from public schools.

LISTEN TO YOUR ELDERS

"Huge" is how Wilkerson sums up the market for franchises geared toward seniors. The mere fact that 20 percent of the U.S. population will be over the age of 65 by 2030, according to the Administration on Aging in Washington, DC, illustrates the wealth of emerging opportunities.

"You're going to see a lot of opportunities to service the well-aged senior," agrees Michael Seid, managing director of franchise advisory firm Michael H. Seid & Associates LLC in West Hartford, Connecticut. "They're not going to be as old at 80 as the generation before was at 60." Still, given less-nimble limbs and fading sight, services like nonmedical senior care--where clients are aided with grocery shopping, house cleaning and food preparation while still living in their own homes--are booming. Franchisor Home Instead Senior Care found that one-quarter of all U.S. households care for either elderly relatives or friends; of that total, 52 percent work full time. Rather than opt for traditional retirement homes, the trend will be to turn to franchises providing non-medical senior care. And while in-home medical care for seniors has not faded away, Wilkerson notes the industry faces a lack of state-licensed laborers.

And the opportunities don't stop there. With retirement lasting longer than ever, look for franchises focusing on golf and travel (cruises, especially) to be reinvigorated in the coming years.

HAIRY SITUATION

Nearly every hair-care franchise included in our listing increased its number of units from last year. There's such a thing as over-saturation in a given market, but all in all, the risk is small. "[The industry] is still growing because if there's a business that's fairly recession-proof, it's hair," says Seid. "People need haircuts when they're working and also when they're not working. They're on a tighter budget but want to treat themselves. [A haircut] is less expensive than a massage or facial."

At least as long as the provider is a Supercuts or Great Clips Inc.-style establishment where the affordable haircut reigns supreme. "What we haven't seen," says Seid, "is the emergence of a higher-end chain."

What you will see, according to Wilkerson, is an increasing number of smaller stores strategically located in business environments abundant with people from 8 a.m. to 6 p.m. The problem is staffing them: Again, state licensing requirements for cosmetologists have left the labor pool shallow. But demand will no doubt send a slew of new hopefuls to cosmetology school. Says Wilkerson, "Everyone needs to get a haircut. We'll never get away from that."