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Franchise Industry Predictions for 2016

by Ed Teixeira

For the year 2016 here are my predictions of major events in the franchise industry

In my last newsletter I provided a recap of key events that affected the franchise industry in 2015. Now I provide my franchise industry predictions for 2016.

1. The franchise categories, that led the industry in 2015, will continue to dominate franchising in 2016:

  • QSR- look for more specialty and ethnic based franchise concepts
  • Personal Services- especially the home care and children services sectors will remain vibrant. The wellness and fitness sectors will remain strong
  • Lodging- fueled by a stronger U.S. economy and lower oil prices, more people will travel and use lodging services in 2016
  • Residential and Commercial Services- will continue to grow and will benefit from an aging population of home owners that seek home maintenance services, as well as a resurgence of the residential housing market

2. Any increase in interest rates such as the recent ľ point increase by the Federal Reserve will tighten credit for small businesses and franchising. Look for third party lenders that specialize in the franchise industry to grow in popularity

3. There will be continued acquisitions and mergers by Private Equity firms in 2016. The favorable returns and scalability that franchising offers will increase the amount of investment in franchise companies by financial firms.

4. The Joint Employer issue promulgated by recent NLRB decisions, especially the Browning-Ferris Industries ruling, will cause the most vulnerable franchisors to increase their oversight and increase control over their franchisees by tweaking their franchise contracts to avoid direct and immediate control over franchisee employment. Franchising will continue to seek relief from the further NLRB decisions regarding Joint Employer rulings through congressional action.

5. Politicians will remain divided and polarized over particular issues regardless of the 2016 election outcomes.

6. Item 19 disclosures will increase in use and detail, as Financial Performance Representations become a significant competitive issue.

7. The franchise industry will continue to experience positive growth.

8. Franchisors, especially in the QSR sector will adapt to increases in minimum wages by increasing the use of technology.

Iíll revisit these predictions during the upcoming year to learn where they stand.

© 2015 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at franchiseknowhow@gmail.com

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