Home-Based Franchises Keep Growing

Home-Based Franchises Keep Growing

 Comment from Tom:

The following article covers two areas that should be of interest to business brokers – franchises and home-based businesses. The market-place for business brokers is rapidly changing. For years it has been dominated by “mom and pop” style businesses. The marketplace is changing – it is still mainly “mom and pop,” but they are changing how and what they now are operating. Franchising is slowly replacing the independent business. More and more potential buyers are going into business by purchasing a franchise. I have been saying for years that the biggest competition for buyers are the franchisors. Business brokers have to get involved in selling both new franchises and handling resales. Our surveys indicate that most business brokers are not involved in either. There are many, many new and upcoming franchises that would be very quick to use the services of a business broker to find new franchisees.

The second area that business brokers are not capturing is the home-based business. This ties in with the article below – what better than home-based franchises. InfoUSA claims to have a list of 1.3 million home-based businesses. Why not get a list for your area and do a mailing? Become the home-based business brokerage expert. Why not contact the home-based franchises listed below and see if they could use your help in your area.”

The number of home based franchises continues to grow and in some franchise segments the home based feature exists in a majority of the total franchise companies. This article presents some interesting statistics and the reasons why home based franchises continue to grow.

Looking back into franchise history the typical franchise was a bricks and mortar franchise whether it was a KFC, Dunkin Donuts or McDonalds. It wasn’t that long ago that a home based franchise was considered an anomaly or an exception to what we typically consider a franchise. In recent years however, things have changed as the number of home based franchises have continued to grow in numbers and popularity. If the franchise customers are not required to go to a specific location then chances are that particular franchise can be home based.

Consider the following franchise categories and the percent of franchisors that are based upon a home based operation:

Franchise Segment Percentage with Home Based Franchises

Automotive 21%
Business Services 66%
Children’s Businesses 41%
Financial Services 43%
Home Improvement 82%
Maintenance Services 81%
Senior Care 30%
Technology or Internet 75%

                                                                     Source: Entrepreneur 500

Even in the category of automotive services, one fifth of the franchises offer a home based alternative.

There are a number of reasons why home based franchises have become so popular.

  • The popularity and growth of franchising.
  • Growth and popularity of home based businesses has flowed into franchising.
  • Certain franchise segments such as business services, home improvement and maintenance franchises facilitate home based operations.
  • Home based franchises represent a lower investment
  • Faster start up
  • More franchisors looking to create and launch home based franchises
  • Lower cost of overhead (no office rent, fewer employees, etc.)
  • Advances in technology.

Clearly, the increase in home based franchises has emerged from the increased growth of home based businesses. According to new data on firms that responded to the U.S. Census Bureau 2007 Survey of Business Owners (SBO), slightly more than half of U.S. businesses — 51.6 percent — were home-based. Moreover, 58.2 percent of women-owned respondent firms were home-based. In 2007, 72.7 percent of the nation’s businesses reported that individual customers accounted for at least 10 percent of their total sales of goods and services. Also, the dreams of immigrating to the United States and then starting or acquiring a business have become a reality for many, as 13.6 percent of owners reported they were born outside the United States.

As technology continues to play an ever increasing role in the world of business we can expect more home based franchise concepts to emerge. In addition, look for home based franchises to continue to develop new business concepts.



© 2011 FranchiseKnowHow, LLC

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

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