Given the numerous types of goods and services offered by franchised operations and the resurgence of Urban markets, there is a growing trend by franchisors to focus their growth plans on the urban renaissance.
“Franchises in Urban Market across the USA”
By FMM Staff Writer
Competition in a rising Urban Economy
The US economy is one of the most innovative, dynamic and competitive in the world. Known to be the largest consumer market, there are many brands both domestic and international that focus on entering key Urban markets. The past two decades have witnessed more and more families entering and living in the urban core of the US. However, opening in a downtown location pose some challenges for the franchisee. Urban areas often have rigid regulations and extra taxes, especially for the restaurants. Rent, the most important element can be significantly higher than the franchise model calls and may drive the franchises out of the market. Organizations and individuals that realize these uniques Urban opportunities sometimes need to make adjustments to their existing models or create a new one to match the needs of the resurging Urban market. Those that can afford the rent are often forced to move into a storefront half which may require redesigning the concept of franchising from a well-established architectural footprint.
Regardless of the market size; according to the Gary Occhiogrosso, Founder of Franchise Growth Solutions, LLC., a franchise needs the following attributes to be successful:
• It must be credible and needs a proven track record of success
• It must be substantially different and better from its competitors
• The systems must be in place and the knowledge transferable.
• Most importantly, the franchise must provide a return on the investment for the franchisee.
Varied Products and Services
Surprisingly, according to the IFA’s Economic Impact Study, there are over 900,000 franchise business locations and more than 3,200 different franchise creating more than $2.3 trillion in sales every year. One out of every seven jobs in the US is directly created through franchising. In addition, about 54 percent of every retail dollar is spent at a US franchisee.
Of the 3200 franchised brands, 55 percent are retail franchises of which 45 percent of the market is controlled by food. The balance of the brands in the franchise industry are service-related brands IE: lawn care, painting, real estate, senior assistance, plumbing, electrical and other mobile “man with van” type businesses.
Focus on Growth
Given the numerous types of goods and services offered by franchised operations and the resurgence of Urban markets, there is a growing trend by franchisors to focus their growth plans on the urban renaissance. The idea that “the higher the population, the greater the potential customer base” is luring franchise companies that otherwise up to this point never considered some of the larger US Urban markets. The question is; will this trend be maintained and eventually lower the financial risk associated in higher rent areas with growing competition. Be that as it may, many of franchise systems remain focused on maintaining their presence in the top 50 markets in America.
Franchisedirect.com, IFA, Franchise Growth Solutions,LLC.
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