02 May 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:
- Educational Products and Services
- Pet Centers
- Health, Nutrition and Services/Fitness
- Construction and Remodeling
- Children’s Products and Educational Services
- Ice Cream, Yogurt, Smoothies
- Business Aids and Services
- Beauty Salons and Tanning
- Senior Care
- 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.