Top 10 Underperforming Franchise Segments

Top 10 Underperforming Franchise Segments

See the top 10 franchise sectors with those franchisors that had trouble growing. I call them underperforming franchisors.

A few weeks ago I published an article entitled A Startling Franchise Industry Statistic . It reported on franchisors that had sold less than five new franchises despite having been a franchisor for several years. As a follow up to this article I took a look at which franchise industry segments had the highest percent of what I’ll refer to as the “Underperforming Franchisors”.

Following is a list of the top ten Underperformers led by the franchise segment with the highest percent:

  1. Educational Products and Services
  2. Pet Centers
  3. Health, Nutrition and Services/Fitness
  4. Construction and Remodeling
  5. Children’s Products and Educational Services
  6. Ice Cream, Yogurt, Smoothies
  7. Business Aids and Services
  8. Beauty Salons and Tanning
  9. Senior Care
  10. Restaurant, Drive In and Carryout

As you review this ranking, keep in mind that the reasons some franchise segments have a higher percentage of Underperformers compared to others can be due to a number of factors:

  • The franchise segment is growing rapidly and, as a result, attracts more start-ups.
  • Some franchises are by their nature more difficult to sell.
  • Certain start-ups lack the business and/or financial resources to grow.
  • Hot franchise concepts tend to draw new franchisors into that sector, some of which are not up to the challenge.
  • A number of start-up franchisors simply stop actively selling franchises but remain in business as a company operation while retaining the franchise label.

These are the main reasons why there are a higher number of Underperformers in some franchise segments versus others. The lesson for those businesses considering a franchise program is to have the right business model coupled with sufficient capital and good franchising advice. Finally, don’t allow yourself to be convinced that any business can be franchised.