How Shifting Demographics are Reshaping Franchises | 1851 Franchise

America's Changing Face: How Demographics Are Reshaping the Franchise Industry

If you're choosing a franchise or growing your brand, you’ll need to consider what the American workforce and customer base will need by 2040 to stay ahead.

America is changing and the franchise industry is changing to keep pace.  As the population becomes more diverse, older and digitally savvy, franchise brands are adapting to meet the needs and expectations of these new consumer groups — and the labor market that must serve them. 

1851 Franchise spoke with Dean DeBiase, a Silicon Valley CEO and Fortune 500 leader, about how dramatic shifts in demographics, business models and capabilities will change the franchise landscape. 

The Rise of Young, Diverse Entrepreneurs

Interest in entrepreneurialism is skyrocketing. The U.S. Census Bureau reported a record-breaking 5.5 million new business applications filed in 2023. This movement is largely fueled by diverse and young groups, with Black women currently representing the fastest growing group of entrepreneurs, according to DeBiase. 

A recent survey found that 65% of currently working Gen Z members hope to start a business one day.  Franchising could be an easy way to achieve that dream. “Franchising is an attractive marketplace for people who want to run their own business but don’t want to start from scratch,” DeBiase said. “Failure rates are only 5% compared to 50% with startups.”

Franchise operators are recognizing this potential, actively seeking to diversify their ownership base by implementing programs to specifically support young franchisees, offering tailored training, mentorship and access to capital. 

Some brands are also realizing the importance of catering to multiethnic tastes and preferences when it comes to the products, services and marketing campaigns they offer. 

An Aging Workforce and the Demand for Senior Care

Many people are working longer than they had planned to because the economy has been so strained the last few years. 

Jeff Brazier, the chief development officer at Kiddie Academy, has noticed an uptick in the number of people in their 50s and 60s opening early childcare centers. “We’ve seen franchisees opening Kiddie Academies with their children, and then their grandchildren attend the academy too,” he said.  

An aging America has also led to a boom in senior care franchises, from home health care to assisted living facilities. Other franchises are adapting to the unique needs of seniors by offering services like moving services, meal delivery, transportation and companionship programs.

Millennials and Gen Z: Fans of "Side Hustle" and Flexible Work  

COVID and advances in technology created a "side gig" culture. Younger people are particularly interested in flexible work arrangements and supplemental income streams. Franchises offer a potential avenue for individuals to start their own businesses while maintaining other commitments. “I’m seeing a blurring between franchises and the gig economy,” DeBiase said. “UPS is the best example of this. Entrepreneurs created UPS. Their customers are independent gig operators who use UPS to run their businesses like Amazon stores.”  

The more these customers use UPS, the more likely they are to realize that UPS is a franchise. “They see that UPS has almost no competition, unlike fast food franchises,” DeBiase said. “Once they start talking to UPS, they like the numbers.” 

UPS has a great opportunity to scale. “They’ve got people coming in every day to return Amazon packages,” DeBiase said. “If you get those people to buy a card while they’re in the store, your returns will be even bigger.” 

The Great Migration to Less Populated Areas

Recent data shows people are increasingly moving from urban areas to rural locales. This trend, fueled by factors like remote work opportunities, a desire for more space and a lower cost of living, is reshaping population distribution across the country. 

America’s fastest-growing places are increasingly likely to be far-flung exurban communities on the outer margins of metro areas, according to recent census data. 

That means these rural communities have new needs for goods and services. Franchises can thrive in such communities. Brazier has seen an increase in Kiddie Academy requests from rural communities. “There's limited availability for childcare in certain markets,” Brazier said. “But the demand is there. People still need a place to send their kids, even if they’re working remotely.” 

Changing Demographics Lead to Opportunities and Challenges 

While these demographic shifts present exciting opportunities, they also bring challenges.  Franchises need to be agile and innovative to stay ahead of the curve. But franchisors and franchisees can use these changes to benefit their bottom lines as long as they conduct the right market research and cater to younger and more diverse audiences.

Every great franchisee had help buying a franchise. Want to learn more about how 1851 helps franchisees find the right franchise opportunity? Visit www.1851growthclub.com and start your journey.