How to Choose the Best Franchise to Own in 2023

In 2022, the franchising industry encountered a deceleration following a period of robust growth and recovery in the preceding year. It grappled with economic challenges such as elevated inflation, labor shortages, and supply chain disruptions. Despite these difficulties, the franchise business model showcased its resilience amid the economic uncertainties triggered by the COVID-19 pandemic. As per the International Franchise Association (IFA) 2023 Economic Outlook report, half of franchisees reported enhanced coping with inflationary pressures and pandemic-related challenges, attributing their success to the support provided by their franchise networks.

Economic Overview of the Franchising Industry: 2019 to 2023

Franchising Economic Trends (2019-2023)

• The number of franchise establishments surged from 773,603 in 2019 to an estimated 790,492 in 2022, with a projected additional increase to 805,436 in 2023.
• Franchise employment underwent fluctuations, yet it is anticipated to achieve 8.7 million by 2023, reflecting a growth rate of 3.0%.
• The total franchise output is projected to witness a 4.2% increase, rising from $825.4 billion in 2022 to $860.1 billion in 2023.
• Franchises' GDP is anticipated to grow by 4.2%, reaching $521.3 billion in 2023, thereby sustaining a consistent share of 3% in the overall economy.

Forecasts for 2023 in the Franchising Industry:

• An increase of nearly 15,000 franchise establishments, reflecting a 1.9% growth to a total of 805,000 units.
• The addition of approximately 254,000 jobs, contributing to a total franchise employment of 8.7 million.
• A 4.2% rise in total franchise output, reaching $860.1 billion.
• Steady growth in franchises' GDP, with a 4.2% increase to $521.3 billion.
• Service-based industries and quick-service restaurants (QSRs) are expected to exhibit higher growth compared to other sectors.
• Texas is anticipated to lead in franchise activity growth in 2023, with the Southern U.S. surpassing other regions in the franchise market.

Top Franchises to Own in the U.S.

Explore the success stories of these historically acclaimed franchise chains along with relevant facts:

McDonald's

Fact: McDonald's stands out as one of the most successful and globally recognized franchises.

Statistical Insight: In 2021, McDonald's boasted over 13,900 franchise units in the U.S. alone.

Little-Known Fact: McDonald's caters to approximately 69 million customers daily worldwide, showcasing its vast and consistent consumer reach.

Subway

Fact: Subway is recognized as the largest fast-food chain globally based on the number of locations.

Statistical Insight: As of 2021, Subway proudly operated over 22,000 franchise units in the U.S.

Little-Known Fact: Subway is renowned for its customizable sandwich menu, providing a diverse array of options that allow customers to tailor their preferences.

The UPS Store

Fact: The UPS Store is a widely recognized franchisor offering shipping, printing, and business services.

Statistical Insight: In 2021, The UPS Store boasted over 5,000 franchise locations in the U.S.

Little-Known Fact: The UPS Store operates as a subsidiary of UPS (United Parcel Service), a global leader in package delivery and supply chain management.

7-Eleven

Fact: 7-Eleven is a convenience store chain renowned for its 24/7 operation.

Statistical Insight: As of 2021, 7-Eleven boasted over 9,000 stores in the U.S.

Little-Known Fact: 7-Eleven pioneered the concept of convenience retailing and operates in multiple countries, making it a global leader in the convenience store industry.

Starbucks

Fact: Starbucks is a globally recognized coffeehouse chain celebrated for its specialty coffee and inviting ambiance.

Statistical Insight: As of 2021, Starbucks maintained approximately 15,340 stores in the U.S.

Little-Known Fact: Starbucks has diversified its offerings beyond coffee, providing a range of beverages, snacks, and merchandise to cater to a broader customer base.

Statistical Facts

Best Performing Franchises

Franchises Leveraging Technology

Statistical Insight

‍The technology sector is experiencing robust growth, marked by a 15% year-over-year increase in revenue for tech-driven franchises.

Takeaway

‍Incorporating and adapting to technological trends is a crucial element for the success of franchises in 2023.

Health and Wellness

Statistical Insight

‍Over the last two years, consumer spending in the health and wellness industry has notably surged by 20%.

Takeawa‍y

The unwavering commitment to well-being emerges as a compelling factor driving the continuous expansion of franchises in this sector.

Home Services

Statistical Insight

‍The home services sector boasts a commendable 90% franchisee satisfaction rate, underscoring its status as a stable and dependable investment.

Takeaway

‍Catering to the demand for convenient home services remains a lucrative and enduring opportunity.

Eco-Friendly Franchises

Statistical Insight

‍Franchises dedicated to sustainability showcase a 25% higher customer retention rate.

Takeaway

‍Environmental awareness is not merely a passing trend but a substantial influencer in shaping consumer preferences.

Fast-Casual Dining

Statistical Insight:

Fast-casual dining franchises have surpassed traditional dining, boasting a 10% higher profit margin.

Takeaway:

Consumers are attracted to swift, high-quality dining experiences, rendering this sector a resilient and appealing choice.

Struggling Franchise Units

Traditional Retail

Statistical Insight

‍Traditional retail franchises have witnessed a 15% decline in revenue over the past three years.

Takeaway

‍The transition to e-commerce poses a substantial challenge for brick-and-mortar businesses.

Print Media

Statistical Insight

‍Print media franchises undergo a 20% annual decline in circulation.

Takeaway

The digital era presents a significant challenge to franchises within the print industry.

Informal Dining Chains

Statistical Insight

‍Casual dining chains have experienced a 5% decrease in sales due to oversaturation.

Takeaway

‍Survival in this competitive sector hinges on innovation and the delivery of unique dining experiences.

Travel and Tourism

Statistical Insight

‍The travel and tourism industry has encountered a 30% reduction in consumer spending due to global events.

Takeaway

‍Persisting uncertainties may influence the recovery of franchises within this sector.

Fiercely Contested Markets

Statistical Insight

‍Franchises venturing into highly competitive markets confront a 40% higher risk of closure within the initial two years.

Takeaway

‍Conducting comprehensive market research is imperative to steer clear of investing in oversaturated industries.

Obscure Nuggets of Knowledge

Tech-Infused Franchises

Obscure Fact: The surge in demand for augmented reality experiences has propelled a notable 25% upswing in revenue for franchises wholeheartedly adopting this technology.

Wellness Industry Insights

Obscure Fact: Franchises providing tailored wellness plans have experienced a noteworthy 30% increase in customer loyalty rates.

Sustainable Ventures

Obscure Fact: The incorporation of eco-friendly packaging within sustainable franchises has yielded a substantial 15% upswing in customer satisfaction.

Home Services Innovations

Obscure Fact: The integration of smart home technologies in home services franchises has led to a significant 20% surge in customer referrals.

Quick Eats Insight

Obscure Fact: Franchises integrating plant-based options have witnessed a noteworthy 10% expansion in sales, aligning with the increasing demand for healthier dining choices.

Guidelines for Selecting the Ideal Franchise

Thorough Research

Guideline: Delve extensively into industry reports, consumer trends, and franchise disclosure documents (FDDs) for a well-rounded understanding.

Engage with Current Franchisees

Guideline: Connect with current franchisees to glean insights into daily operations, challenges, and overall satisfaction levels.

Factor in Market Trends

Guideline: Scrutinize market trends to pinpoint emerging opportunities and potential risks within the chosen industry.

Assess Franchisor Support

Guideline: Evaluate the extent of support offered by the franchisor, encompassing training programs, marketing assistance, and continuous guidance.

Financial Scrutiny

Guideline: Perform meticulous financial due diligence, encompassing a comprehensive analysis of initial investment costs, royalty fees, and potential return on investment.

Selecting the Perfect Franchise Fit

Embrace Adaptability

Key Point: Franchises that exhibit flexibility in adapting to shifting consumer preferences and technological advancements are poised for success.

Customer-Centric Focus

Key Point: Prioritize customer satisfaction and customize offerings to align with the increasing demand for personalized experiences.

Prioritize Sustainability

Key Insight: Adopting sustainable and eco-friendly practices is not just a matter of ethics but also a cornerstone of long-term business prosperity.

Innovation as a Catalyst

Key Insight: In fiercely contested markets, the driving force for success lies in innovating products, services, and customer experiences.

Due Diligence is Crucial

Key Insight: Rigorous research, financial scrutiny, and engaging with current franchisees are non-negotiable steps in ensuring a well-informed decision.