The 5 Hottest Segments of the Franchise Industry To Invest In for 2020

According to several sources, 2018 was one of the most lucrative years in recent history for franchising. Overall, the market sector contributed a whopping $451 billion into the U.S. economy. If you are interested in purchasing a franchise, these segments are at the top of the list. 

Health & Fitness 

The fitness industry is booming right now. One in five Americans have a gym membership and the business of working out is in a great spot. Last year, actual visits to the gym exceeded 5 billion, an all-time high for the country. A combination of poor health averages and an increase in fitness education has allowed this industry to flourish, pulling in $31 million in revenue annually. 

Over 70% of American adults struggle with their weight, and now that options range from yoga to trampoline gyms, many of those people are investing in some sort of fitness membership. There are plenty of health and fitness franchise opportunities available for every fitness level, from traditional gyms to boutique studio concepts.

If you are looking to buy a franchise in 2019, the fitness and health industry boasts a great work-life balance, can offer a low and flexible entry point and provides multiple revenue streams such as branded content and personal coaching. Planet Fitness was just included on Forbes’ ‘Best Franchises to Buy in 2019’ list in the high investment category, and the industry shows no signs in slowing down. According to the Bureau of Labor Statistics, fitness and recreational centers employed 533,200 people in 2014 with an expected growth of 8% by 2024.  

“The fitness industry is incredibly hot right now,” said Steve Beagelman, CEO of SMB Franchise Advisors*. “It not only includes traditional gyms, but there are now so many new options to choose from, whether it be obstacle courses, ninja gyms, rowing, yoga or anything else. The industry has become a mix of fitness and entertainment.”

Of course, it can’t all be perfect. Competition in the industry is cutthroat, with companies out pricing each other with special offers and membership programs. Still, overall the health and fitness industry offers impressive opportunities for potential franchisees. 

Beauty Services

Everyone wants to look good, right? The numbers don’t lie. In 2015, the beauty industry generated a staggering $56.2 billion in the U.S. Since then, this segment of the franchise industry has been steadily on the rise, with Hand & Stone Massage and Facial Spa nabbing the No. 8 spot on Forbes’ aforementioned list. There is a good reason, as the beauty services segment encompasses far more than one would think at first blush (get it?). Beauty services include everything from waxing to lash care to perfume. 

“Quality of life is more important to the younger generations who now have purchasing power,” Beagelman said. “Massage, cryotherapy and other services are becoming more popular as people prioritize looking and feeling good.” 

Not only is there an array of beauty service needs, but there is also a massive amount of nuance that allows for niche markets to flourish—15% of all beauty franchise sales come from products instead of services. Consumers are pickier than ever, they know what they want and won’t compromise on less-than. Plus, the rise of organic products, men’s products, baby products and celebrity products has created a strong market for millennial customers.

Quick-Service Restaurants (QSRs)

When they hear the word ‘franchise,’ most people probably think of this industry. The fast-food and fast-casual industry, also known as QSR (quick-service restaurants), accounts for over 50% of sales in the entire restaurant sector. Overall, the industry generates an unbelievable $200 billion per year in the U.S. alone. In fact, it is estimated that 50 million Americans eat at one of the country’s 200,000 fast-food restaurants every single day.

Obviously, the QSR segment is vast. What’s most intriguing, though, is that it shows no signs of slowing down, with an expected annual growth of 2.5% for the next several years. The segment has largely been able to overcome its reputation for being unhealthy and paying low wages while still catering to consumers’ ever-present needs for affordability and convenience.

Burger chains, pizza concepts and sandwich shops dominate this industry, but certain niche markets are beginning to blaze the way for future franchisees, including Asian fast food. 

Home Services

Another sector to pay attention to in the franchise space is the home service industry. The growing economy is leading to an influx of home sales, which means people are looking to spend money on improvements before going forward with a sale in the realm of everything from remodeling to painting to lawn care, window care and even pest control. 

The U.S. online home services sector is now a $600 billion market. Its rapid growth can be attributed to a variety of factors, including the trend of online booking services, the rise of dual-family income and the aging homeowner market. 

The home services industry increasingly presents prospective franchisees with a low cost of entry, seasonal revenue stream and a manageable work-life balance. “The home service sector is also easier to get into because it does not require leasing a location,” Beagelman noted. 

Children’s Services

There are 74 million children under the age of 18 in the U.S., and parents are more involved with and concerned than ever with their children’s health, education and overall wellbeing. Increasingly shrinking school budgets are pushing parents to look elsewhere for supplemental education opportunities, access to the arts and other opportunities to be active and gain valuable skills through businesses such as Big Blue Swim School, The Little Gym and Sky Zone. 

The supplemental education segment of the children’s services franchise spae is also flourishing evident in both Primrose School and Kiddie Academy appearing on Forbes’ top 10 list in the high investment category. With Americans spending more time at work than ever before, it is no wonder this segment is of such high value.