Franchise experts share their thoughts on which growing cities are booming with business opportunity.

Expanding your franchise brand into new markets for a more extensive geographic reach is a huge decision that should not be taken lightly. While certain cities may be on your development wishlist, it’s crucial to be realistic—for a five-unit brand based in North Carolina, for instance, Los Angeles may not be the most practical destination for expansion as it currently stands.

The good news is that there are many cities on the come-up throughout the United States that make an enticing case for franchise development for a variety of reasons.

Jonathan Pace is the CEO of On Pace Franchising, a franchise consulting and business brokerage firm that specializes in helping first-time franchise buyers who are considering making the move from the corporate world to small business ownership. The first thing franchise brands should consider when evaluating potential development destinations, Pace said, is where their target demographic resides as it relates to both consumers and franchisees. 

“Different cities have different appeals to different brands,” Pace said. And while some markets have dense populations, the cost of rent should also be a factor in a brand’s expansion plans, Pace added, noting, “If you’re getting into brick-and-mortar, that can be a little high.” 

With that in mind, Pace specifically pointed to Denver and Dallas as markets with tremendous potential for franchise success. As smaller cities on the rise, Denver and Dallas were once “unknown or smaller gems” that caught on and now have more people flocking to them as a result—young families, in particular. 

Chicago is another desirable market for franchise growth, particularly for the health and fitness segment and boutique fitness studio concepts specifically, Pace said. “I’ve noticed a trend around health there,” he said, adding that more people are “wanting to make sure they’re doing the right things for themselves.” 

Jeff Fromm, a thought leader with expertise in brand strategies and consumer trends, has done consulting work for brands such as Dairy Queen and Wingstop. He pointed to recent moving trends among millennials as an influencing factor in how franchise brands are making decisions in regard to expansion.

“Balancing student loan debt and their families, millennials are less likely to buy homes, put down roots and stay in one place,” Fromm wrote in an email. “One trend we're seeing is millennial migration from either coast to cities with lower costs of living, enabling these consumers to find the curated variety of products and services they love to experience, but at much more affordable prices.”

Specific cities in which this trend is occurring include Midwestern cities such as Minneapolis, Minnesota; Omaha, Nebraska; Columbus, Ohio and Kansas City, Missouri. These locations, Fromm said, “still boast an urban atmosphere, but with much lower costs of living than either coast provides. As we expect to see this trend continue, franchises would be smart to analyze the fastest-growing cities in the country, but with the lowest cost of living, to find areas of opportunity.”

And on the other hand, there are certain cities or regions brands may want to steer clear of depending on the services they offer, Fromm noted.

“Cities offer different things to different people and it is important to be aware of the population and the culture of the city,” Fromm wrote. “If I have a brand that caters to kids, I wouldn't choose Washington, D.C. as a place to set up shop. I would choose a place like Provo, Utah that has a higher population of young families. If I were starting a cannabis franchise, I would obviously choose Denver, where recreational marijuana is legal. You can see this with Washington, D.C. as well—with one of the most diverse populations in the country, many new and exciting food franchises have been emerging with quite a bit of success.”