Positive franchise sales outlook for franchisors targeting younger franchisees

According to research by FranData and the International Franchise Association’s 2023 economic outlook, the number of franchised units in the US is expected to reach 805,000 this year, representing a nearly 2% increase from last year with approximately 15,000 new stores.

The projected output of franchising in the US for this year is over $860 billion. Despite concerns about a recession, development leaders across different franchising categories are optimistic about franchise sales this year. Franchisors are now focusing on attracting younger franchisees.

Always Best Care, a senior care franchise, sold 10 franchises in 2022, which was above their goal of nine. The brand is expecting March 2023 to be one of its best months ever in terms of leads. As the senior population continues to grow, the need for care will increase, and younger franchisees are starting to recognize this opportunity. According to FranData, the personal services sector saw a nearly 3% increase in franchised units in the US last year and is projected to have a 2.5% increase, reaching 120,302 units this year.

Last year, Ace Handyman Services sold 88 territories, a bit less than its 100-territory goal.

“The start of the interest rates rising and the general conversation about a recession slowed some people down last year,” Vice President of Franchise Development Colette Bell said.

According to Bell, younger generations are more interested in owning a business than previous generations. Bell and her husband founded Handyman Matters as a franchise in their 20s and later sold it to Ace Hardware.

Ace Handyman Services’ appeal to younger generations lies in the brand’s commitment to community impact. Ace Handyman Services has seen younger franchisees in their late 20s and early 30s who are passionate and making a difference. The commercial and residential services sector grew by almost 3% in 2022, with projected growth of 2.1% this year. Ace Handyman Services has sold about 20 territories in 2023 so far.

HOA Brands, the parent company of Hooters, has seen an increase in sales since the end of 2022, particularly in other countries, attributed to the pandemic’s tailwind, according to Chief Development Officer Michael Arrowsmith.

HOA Brands is targeting younger franchisees by reflecting the age group in its recruiters. He said age is another facet of diversity, and just like with race or gender, franchisees need to see themselves in the company.

Arrowsmith emphasized the importance of having young people on staff to attract younger generations as customers. “If you want to attract younger generations into your brand, either as a consumer or as a customer, you’ve got to be sure that you’ve got those people on staff, because they’re gonna know that language,” he said. Full-service restaurants increased their number of stores by about 2.7 percent last year, but FranData projects a lower increase of 1.1 percent, or 360 stores, for this year.

Quick-service restaurants have a more positive outlook, with FranData projecting a 2.5 percent increase, or about 4,800 more stores, for a total of 196,858 units. Pizzeria Uno experienced a “growth spurt” last year, with six new units opened, four of which are located in full-service hotels. The company has since focused on franchising and started a program aimed at helping store managers become franchise owners.

Many of these managers have been with the company for a decade or so, Frederick said. “We save a lot on training. We’re waiving the franchise fees. They just have to have skin in the game and, frankly, enough working capital so that they can navigate some of the bumps in the night,” he said.

“We believe that the very best general managers … in their hearts, they’re already the owner,” he said. “So, we’re just giving them a chance to really do that on their own, and hopefully create some wealth for themselves.”
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