Franchise Growth (Part 1 of 3)

“What is selling?” is one of the questions most often asked, not only by business brokers, but also by buyers and sellers.

What was selling then?

When I first got into the business brokerage business in Southern California, beer bars were the big seller. California, at the time, issued licenses for just the sale of beer and they issued separate licenses for hard liquor drinks. At the time they also issued beer and wine licenses, but these were generally issued to restaurants. Our brokerage office also sold a lot of small coffee shops, quick serve places, and coin laundries, but beer bars were the biggest seller.

So, what’s selling now?

I suspect that the biggest sellers now are something that most business brokers don’t get involved in, but should. The sale of franchises, both new and existing, make up a very small percentage of what business brokers are selling in today’s market.

Our most recent survey revealed that the sale of new franchises represented only 2 percent of total business sales. The sale of existing franchises represented only 6 percent of total business sales. Considering the number of franchised businesses, these are very low numbers.

Why is this important? Total franchise revenue for 2012 is forecast at $87.8 billion. That’s a significant number.

Tomorrow’s posting will reveal the best franchises by category.